LOAN AND SECURITY AGREEMENT
by and among
JII, INC.,
as Borrower,
CONGRESS FINANCIAL CORPORATION (CENTRAL),
as Agent,
FIRST UNION NATIONAL BANK,
as a Lender,
and
THE OTHER FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO,
as Lenders
Dated: August 16, 2001
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.....................................................1
SECTION 2. CREDIT FACILITIES..............................................28
2.1 Revolving Loans....................................................28
2.2 Letter of Credit Accommodations....................................29
2.3 Commitments........................................................33
2.4 Availability Reserves..............................................33
SECTION 3. INTEREST AND FEES..............................................34
3.1 Interest...........................................................34
3.2 Other Fees.........................................................35
3.3 Changes in Laws and Increased Costs of Loans.......................35
SECTION 4. CONDITIONS PRECEDENT...........................................37
4.1 Conditions Precedent to Initial Loans and Letter
of Credit Accommodations.........................................37
4.2 Conditions Precedent to All Loans and Letter of
Credit Accommodations............................................37
SECTION 5. GRANT OF SECURITY INTEREST.....................................38
SECTION 6. COLLECTION AND ADMINISTRATION..................................39
6.1 Loan Accounts and Intercompany Loan Accounts.......................39
6.2 Statements.........................................................40
6.3 Collection of Accounts.............................................40
6.4 Payments...........................................................42
6.5 Authorization to Make Loans........................................43
6.6 Use of Proceeds....................................................43
6.7 Pro Rata Treatment.................................................43
6.8 Sharing of Payments, Etc...........................................44
6.9 Settlement Procedures..............................................45
6.10 Taxes..............................................................47
6.11 Application of Payments............................................49
SECTION 7. COLLATERAL REPORTING AND COVENANTS.............................49
7.1 Collateral Reporting...............................................49
7.2 Accounts Covenants.................................................50
7.3 Inventory Covenants................................................52
7.4 Equipment and Real Property Covenants..............................53
7.5 Power of Attorney..................................................54
7.6 Right to Cure......................................................55
7.7 Access to Premises.................................................55
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SECTION 8. REPRESENTATIONS AND WARRANTIES.................................55
8.1 Corporate Existence, Power and Authority; Subsidiaries.............56
8.2 Financial Statements; No Material Adverse Change...................56
8.3 Chief Executive Office; Collateral Locations.......................56
8.4 Priority of Liens; Title to Properties.............................56
8.5 Tax Returns........................................................57
8.6 Litigation.........................................................57
8.7 Compliance with Other Agreements and Applicable Laws...............57
8.8 Environmental Compliance...........................................58
8.9 Employee Benefits..................................................58
8.10 Bank Accounts......................................................60
8.11 Intellectual Property..............................................60
8.12 Capitalization.....................................................61
8.13 Labor Disputes.....................................................61
8.14 Corporate Name; Prior Transactions.................................61
8.15 Restrictions on Restricted Subsidiaries............................62
8.16 Material Contracts.................................................62
8.17 Status of Parent, Borrower and Intermediate Holding Companies......62
8.18 Non-Restricted Subsidiaries........................................62
8.19 Accuracy and Completeness of Information...........................62
8.20 Survival of Warranties; Cumulative.................................62
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS.............................63
9.1 Maintenance of Existence...........................................63
9.2 New Collateral Locations...........................................63
9.3 Compliance with Laws, Regulations, Etc.............................63
9.4 Payment of Taxes and Claims........................................65
9.5 Insurance..........................................................65
9.6 Financial Statements and Other Information.........................66
9.7 Sale of Assets, Consolidation, Merger, Amalgamations,
Dissolution, Etc.................................................67
9.8 Encumbrances.......................................................70
9.9 Indebtedness.......................................................72
9.10 Loans, Investments, Guarantees, Etc................................74
9.11 Dividends and Redemptions..........................................76
9.12 Transactions with Affiliates; Management Fees......................76
9.13 Additional Bank Accounts...........................................77
9.14 Compliance with ERISA and Operation of Canadian
Pension Plans....................................................77
9.15 End of Fiscal Years; Fiscal Quarters...............................78
9.16 Change in Business.................................................78
9.17 No Amendments......................................................78
9.18 Pre-Tax Net Income.................................................79
9.19 Fixed Charge Coverage Ratio........................................79
9.20 Costs and Expenses.................................................79
9.21 Applications under CCAA............................................80
9.22 Material Adverse Effect............................................80
9.23 Further Assurances.................................................81
SECTION 10. EVENTS OF DEFAULT AND REMEDIES.................................81
10.1 Events of Default..................................................81
10.2 Remedies...........................................................83
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SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW...85
11.1 Governing Law; Choice of Forum; Service of Process; Jury
Trial Waiver.....................................................85
11.2 Waiver of Notices..................................................87
11.3 Amendments and Waivers.............................................87
11.4 Waiver of Counterclaims............................................88
11.5 Indemnification....................................................88
SECTION 12. THE AGENT......................................................89
12.1 Appointment, Powers and Immunities.................................89
12.2 Reliance by Agent..................................................89
12.3 Events of Default..................................................89
12.4 Congress in its Individual Capacity................................90
12.5 Indemnification....................................................90
12.6 Non-Reliance on Agent and Other Lenders............................91
12.7 Failure to Act.....................................................91
12.8 Additional Loans...................................................91
12.9 Concerning the Collateral and the Related
Financing Agreements.............................................92
12.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders............................................92
12.11 Collateral Matters.................................................92
12.12 Agency for Perfection..............................................94
12.13 Successor Agent....................................................94
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS...............................95
13.1 Term...............................................................95
13.2 Interpretative Provisions..........................................96
13.3 Notices............................................................98
13.4 Partial Invalidity.................................................99
13.5 Confidentiality....................................................99
13.6 Successors........................................................100
13.7 Assignments; Participations.......................................100
13.8 Entire Agreement..................................................103
13.9 Counterparts......................................................104
13.10 Judgment Currency.................................................104
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INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Borrowing Base Certificate
Exhibit C Information Certificate
Exhibit D Form of Compliance Certificate
Exhibit E Form of Subscription Agreement
Exhibit F Form of Subordinated Note
Schedule 1.86 Operating Companies
Schedule 2 Loan Commitments
Schedule 4.1 Closing Documents
Schedule 8.6 Litigation
Schedule 8.8 Environmental Matters
Schedule 8.10 Bank Accounts
Schedule 8.11 Licensed Intellectual Property
Schedule 8.13 Labor Matters
Schedule 8.15 Restrictions on Restricted Subsidiaries
Schedule 8.16 Material Contracts
Schedule 9.8 Existing Liens
Schedule 9.9 Existing Indebtedness
Schedule 9.12 Professional Agreements
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LOAN AND SECURITY AGREEMENT
---------------------------
This Loan and Security Agreement dated August 16, 2001 is entered
into by and among JII, Inc., a Delaware corporation ("Borrower"), First
Union National Bank, as a lender, the other financial institutions from
time to time parties hereto as lenders, whether by execution of this
Agreement or an Assignment and Acceptance (together with First Union
National Bank, each individually, a "Lender" and collectively, "Lenders"),
and Congress Financial Corporation (Central), an Illinois corporation, in
its capacity as agent for Lenders (in such capacity, "Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrower and certain of its Restricted Subsidiaries are
obligated to certain financial institutions under certain revolving credit
loan facilities;
WHEREAS, Borrower and its Restricted Subsidiaries have requested
that Agent and Lenders enter into revolving loan financing arrangements
with Borrower and such Restricted Subsidiaries to refinance such revolving
credit loan facilities and to provide Borrower with additional financial
accommodations for its corporate and other purposes (including the
financing of Restricted Subsidiaries) as more fully described herein; and
WHEREAS, each Lender is willing to agree (severally and not
jointly) to make such loans and provide such financial accommodations to
Borrower on a pro rata basis according to its Commitments (as defined
below) on the terms and conditions set forth herein and Agent is willing to
act as agent for Lenders on the terms and conditions set forth herein and
the other Financing Agreements;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. DEFINITIONS
-----------
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean, with respect to any Person, all of such
Person's present and future rights to payment of a monetary obligation,
whether or not earned by performance, which is not evidenced by chattel
paper or an instrument, (a) for property that has been or is to be sold,
leased, licensed, assigned, or otherwise disposed of, (b) for services
rendered or to be rendered, (c) for a secondary obligation incurred or to
be incurred, or (d) arising out of the use of a credit or charge card or
information contained on or for use with the card.
1.2 "Acquisition" shall mean any transaction resulting in the acquisition
by Borrower or a Restricted Subsidiary of (a) all or substantially all of
the assets of a Person or of any business or division of a Person or (b)
more than 50% of the Capital Stock of a Person (but excluding any
acquisition of a Person consisting of the formation of such Person by
Borrower or such Restricted Subsidiary).
1.3 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards,
if necessary, to the next one-sixteenth (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by
(b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage.
For purposes hereof, "Reserve Percentage" shall mean the reserve
percentage, expressed as a decimal, prescribed by any United States or
foreign banking authority for determining the reserve requirement which is
or would be applicable to deposits of United States dollars in a non-United
States or an international banking office of Reference Bank used to fund a
Eurodollar Rate Loan or any Eurodollar Rate Loan made with the proceeds of
such deposit, whether or not the Reference Bank actually holds or has made
any such deposits or loans. The Adjusted Eurodollar Rate shall be adjusted
on and as of the effective day of any change in the Reserve Percentage.
1.4 "Affiliate" shall mean, with respect to a specified Person, any other
Person (a) which directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control
with such specified Person, (b) which beneficially owns or holds ten (10%)
percent or more of any class of Voting Stock or other equity interest of
such specified Person, (c) of which ten (10%) percent or more of the Voting
Stock or other equity interest is beneficially owned or held by such
specified Person or a Restricted Subsidiary of such specified Person. For
the purposes of this definition, the term "control" (including with
correlative meanings, the terms "controlled by" and "under common control
with"), when used with respect to any specified Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such specified Person, whether
through the ownership of Voting Stock or by contract or otherwise.
1.5 "Affiliate Subordination Agreement" shall mean that certain Affiliate
Subordination Agreement dated as of the date hereof among the Credit
Parties and Agent, as amended, supplemented or otherwise modified from time
to time.
1.6 "Agent" shall mean Congress Financial Corporation (Central), in its
capacity as agent on behalf of Lenders pursuant to the terms hereof and any
replacement or successor agent hereunder.
1.7 "Agreement" shall mean this Loan and Security Agreement, as amended,
restated or otherwise modified from time to time.
1.8 "Applicable Margin" shall mean, at any time, as to the Interest Rate
for Prime Rate Loans and Eurodollar Rate Loans, the applicable percentage
(on a per annum basis) set forth below if the Quarterly Average Excess
Availability for the immediately preceding fiscal quarter is at or within
the amounts indicated for such percentage:
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Quarterly Average Applicable Margin for Applicable Margin for
Excess Availability Prime Rate Loans Eurodollar Rate Loans
------------------- --------------------- ---------------------
(a) $50,000,000 or more .05% 2.35%
(b) Greater than or equal .05% 2.55%
to $25,000,000 and less
than $50,000,000
(c) Greater than or equal .30% 2.80%
to $10,000,000 and less
than $25,000,000
(d) Less than $10,000,000 .55% 3.05%
provided, that, the Applicable Margin shall be calculated and established
after the end of each fiscal quarter in accordance with the definition of
"Interest Rate," commencing with the fiscal quarter ending on or about
December 31, 2001 (which fiscal quarter reflects the earliest full fiscal
quarter for which Quarterly Average Excess Availability can be calculated).
1.9 "Assignment and Acceptance" shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an
assignment of a Lender's interest hereunder in accordance with the
provisions of Section 13.7 hereof.
1.10 "Average Excess Availability" shall mean, for any calendar month,
the average amount of Excess Availability for each day in such month.
1.11 "Bond Documents" shall mean, collectively, (i) the Indenture dated
as of July 25, 1997 between the Parent and First Trust National Association,
as trustee, pertaining to the Parent's 103% Senior Notes due 2007,
(ii) the Indenture dated as of March 22, 1999 between the Parent and U.S.
Bank Trust National Association, as trustee, pertaining to the Parent's
103% Senior Notes due 2007, (iii) the Indenture dated as of April 2,
1997 between the Parent and First Trust National Association, as trustee,
pertaining to the Parent's 11-3/4% Subordinated Discount Debentures due
2009, in each case above, as amended, modified, supplemented, restated,
refinanced or replaced from time to time.
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1.12 "Borrowing Base" shall mean, at any time, the sum of each Operating
Company's Revolving Borrowing Limit at such time. As used herein, the term
"Revolving Borrowing Limit" shall mean, with respect to any Operating
Company at any time, the lesser of (a) any Senior Indebtedness Cap
applicable to such Operating Company at such time, (b) such Operating
Company's Intercompany Loan Balance at such time or (c) the amount equal
to:
(i) the sum of (A) up to eighty-five (85%) percent of the
Net Amount of such Operating Company's Eligible Accounts at such time plus
(B) up to sixty-five percent (65%) of the Net Amount of such Operating
Company's Eligible Xxxx and Hold Accounts at such time, plus
(ii) the lesser of (A) up to sixty-five percent (65%) of
the Value of such Operating Company's Eligible Inventory at such time or
(B) up to eighty-five percent (85%) of the Net Orderly Liquidation Value of
such Operating Company's Eligible Inventory at such time; provided that the
aggregate amount to be included in the Borrowing Base pursuant to this
clause (ii) with respect to all Restricted Subsidiaries cannot exceed the
Inventory Loan Limit, plus
(iii) from and after the Fixed Asset Funding Date, the lesser
of (A) sixty percent (60%) of the appraised fair market value of Eligible
Real Property Related Interests at such time or (B) the Real Property Loan
Limit at such time, as adjusted from time to time pursuant to Section
2.1(d) hereof; plus
(iv) from and after the Fixed Asset Funding Date, the lesser
of (A) one hundred percent (100%) of the Net Forced Liquidation Value of
Eligible Equipment at such time or (B) the Equipment Loan Limit at such
time, as adjusted from time to time pursuant to Section 2.1(e) hereof;
minus
(v) Reserves applicable to such Operating Company.
For purposes only of applying the Inventory Loan Limit under clause (b)(ii)
above, Agent may treat the then undrawn amounts of outstanding Letter of
Credit Accommodations for the purpose of purchasing Eligible Inventory as
Revolving Loans to the extent Agent is in effect basing the issuance of the
Letter of Credit Accommodations on the Value or Net Orderly Liquidation
Value, as applicable, of the Eligible Inventory being purchased with such
Letter of Credit Accommodations. In determining the actual amounts of such
Letter of Credit Accommodations to be so treated for purposes of the
sublimit, the outstanding Revolving Loans and Reserves shall be attributed
first to any components of the lending formulas set forth above that are
not subject to such sublimit, before being attributed to the components of
the lending formulas subject to such sublimit. The amounts of Eligible
Inventory shall, at Agent's option, be determined based on the lesser of
the amount of Inventory set forth in the general ledger of each Operating
Company or the perpetual inventory record maintained by such Operating
Company.
1.13 "Borrowing Base Certificate" shall mean a certificate substantially
in the form of Exhibit B hereto, as such form may from time to time be
modified by Agent, which is duly completed (including all schedules thereto
when required) in a manner acceptable to Agent and executed by the chief
financial officer or other appropriate financial officer of the Borrower
and delivered to Agent.
4
1.14 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close
under the laws of the States of Illinois, New York, or North Carolina, and
a day on which Agent is open for the transaction of business, except that
if a determination of a Business Day shall relate to any Eurodollar Rate
Loans, the term Business Day shall also exclude any day on which banks are
closed for dealings in dollar deposits in the London interbank market or
other applicable Eurodollar Rate market.
1.15 "Canadian Guarantors" means Deflecto Canada Ltd., Instachange
Displays Limited and any other Restricted Subsidiary formed under the laws
of Canada or any province of Canada and their respective successors and
assigns.
1.16 "Canadian Payment Account" shall have the meaning set forth in
Section 6.3(a) hereof.
1.17 "Canadian Pension Plans" shall mean any plan, program or arrangement
that is a pension plan for the purposes of any applicable pension benefits
legislation or any tax laws of Canada or a province thereof, whether or not
registered under any such laws, which is sponsored, maintained or funded,
in whole or part, by, or to which there is or may be an obligation to
contribute by, any Credit Party in respect of any Person's employment in
Canada with any Credit Party.
1.18 "Capital Leases" shall mean, as applied to any Person, any lease of
(or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP,
is required to be reflected as a liability on the balance sheet of such
Person.
1.19 "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated)
of such Person's capital stock or partnership, limited liability company or
other equity interests at any time outstanding, and any and all rights,
warrants or options exchangeable for or convertible into such capital stock
or other interests (but excluding any debt security that is exchangeable
for or convertible into such capital stock).
1.20 "Change of Control" shall mean (a) unless permitted under
Section 9.7 hereof, the transfer (in one transaction or a series of
transactions) of all or substantially all of the assets of Borrower or any
Obligor to any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act); (b) unless permitted under Section 9.7 hereof, the
liquidation or dissolution of Borrower or any Obligor or the adoption of a
plan by the stockholders of Borrower or any Obligor relating to the
dissolution or liquidation of Borrower or any Obligor; (c) the acquisition
by any Person or group (as such term is used in Section 13(d)(3) of the
Exchange Act) of beneficial ownership, directly or indirectly, of a
majority of the voting power of the total outstanding Voting Stock of
Parent; or (d) unless permitted under Section 9.7 hereof, the failure of
Parent to own all of the Capital Stock of Borrower or the failure of
Borrower or any Restricted Subsidiary to own at least the same percentage
of Capital Stock of the Restricted Subsidiaries as set forth in the
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Information Certificate; provided that each Restricted Subsidiary may issue
additional shares of Capital Stock to Persons other than the Credit Party
holding the Capital Stock of such Restricted Subsidiary as set forth in the
Information Certificate so long as (i) such Persons execute a subscription
agreement substantially in the form of Exhibit E hereto, (ii) the aggregate
amount of additional shares of Capital Stock issued by such Restricted
Subsidiary after the date hereof does not exceed fifteen percent (15%) of
the issued and outstanding shares of Capital Stock of such Restricted
Subsidiary on the date hereof and (iii) after giving effect to any such
issuance of Capital Stock by a Restricted Subsidiary to third Persons, more
than fifty percent (50%) of the issued and outstanding Capital Stock and
Voting Stock of such Restricted Subsidiary remains pledged to Agent
pursuant to the Pledge Agreement dated as of the date hereof among Agent
and the "Pledgors" named therein, as amended, supplemented or otherwise
modified from time to time.
1.21 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.22 "Collateral" shall mean all of the property of Borrower described in
Section 5 hereof, together with all other real or personal property of any
Obligor or any other Person upon which Agent now or hereafter holds a lien
to secure repayment of any of the Obligations. As of the date hereof,
Parent has not granted, and is not committed to grant, any liens on its
assets to secure repayment of any of the Obligations.
1.23 "Collateral Access Agreement" shall mean an agreement in writing,
in form and substance reasonably satisfactory to Agent, from any lessor of
premises to or for the benefit of any Operating Company, or any other
person to whom any Collateral is consigned or who has custody, control or
possession of any such Collateral (including any processor) or is otherwise
the owner or operator of any premises on which any of such Collateral is
located, pursuant to which such lessor, consignee, processor or other
person, inter alia, acknowledges the first priority security interest of
Agent in such Collateral, agrees to waive any and all claims such lessor,
consignee, processor or other person may, at any time, have against such
Collateral, whether for processing, storage or otherwise, and agrees to
permit Agent access to, and the right to remain on, the premises of such
lessor, consignee, processor or other person so as to exercise Agent's
rights and remedies and otherwise deal with such Collateral and in the case
of any person who at any time has custody, control or possession of any
bills of lading or other documents of title, agrees to hold such bills of
lading or other documents as bailee for Agent and to follow all
instructions of Agent with respect thereto.
1.24 "Commitments" shall mean, as to any Lender, the aggregate
commitment of such Lender to make Revolving Loans or incur Letter of Credit
Obligations in the maximum principal amount set forth on Schedule 2 hereto
next to such Lender's name or on Schedule 1 to the Assignment and
Acceptance Agreement pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 13.7 hereof, as such
amount may be adjusted, if at all, in accordance with this Agreement.
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1.25 "Concentration Account" shall have the meaning set forth in
Section 6.3(a) hereof.
1.26 "Congress" shall mean Congress Financial Corporation (Central), an
Illinois corporation, in its individual capacity, and its successors and
assigns.
1.27 "Credit Facility" shall mean the Loans and Letter of Credit
Accommodations provided to or for the benefit of Borrower pursuant to
Sections 2.1, 2.2 and 2.3 hereof.
1.28 "Credit Party" shall mean Parent, Borrower and each of Borrower's
Restricted Subsidiaries.
1.29 "Defaulting Lender" shall have the meaning set forth in Section 6.9
hereof.
1.30 "Depository Account" shall have the meaning set forth in
Section 6.3(a) hereof.
1.31 "EBITDA" shall mean, with respect to the Borrower and its Restricted
Subsidiaries on a consolidated Pro-Forma Basis for any fiscal period, (a)
consolidated net income for such period plus (b) an amount which, in the
determination of such consolidated net income, has been deducted for (i)
Interest Expense, (ii) depreciation, (iii) amortization of all intangible
assets (including but not limited to inventory write-ups, goodwill, debt
and financing costs and incentive arrangements), (iv) provisions for
federal, state, local and foreign income, value added and similar taxes;
(v) the aggregate amount of non-capitalized transaction costs and
restructuring charges incurred in connection with financings or
acquisitions (including, but not limited to, financing and refinancing
fees), (vi) all other non-cash charges (including, but not limited to, any
charges relating to purchase accounting adjustments and, without
duplication, non-cash charges in respect of incentive arrangements), (vii)
any extraordinary or non-recurring charge or expense arising out of the
implementation of Statement of Financial Accounting Standards Nos. 106 or
109, (viii) any other non-cash item of expense or loss and (ix) the cash
portion of any extraordinary or one-time gain including, without
limitation, from the sale of assets or stock, but only to the extent such
gain is not reflected in the consolidated net income of Borrower for the
period in which such gain occurred, minus (c) extraordinary or one-time
non-cash gains, all calculated in accordance with GAAP.
1.32 "Eligible Accounts" shall mean Accounts created by an Operating
Company which are and continue to be acceptable to Agent based on the
criteria set forth below. In general, such Accounts shall be Eligible
Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by such Operating Company or rendition of services by
such Operating Company in the ordinary course of its business which
transactions are completed in accordance with the terms and provisions
contained in any documents related thereto; provided, that delivery of any
goods in respect of an Account shall not be required to qualify as an
Eligible Account if such Account arises under xxxx and hold terms for which
Agent is satisfied that the account debtor purchasing such goods has
acknowledged in writing to the satisfaction of Agent that such account
debtor (i) has accepted and taken title to such goods and (ii) is obligated
on such Account notwithstanding the fact that such goods have not been
delivered;
7
(b) such Accounts are not unpaid more than (i) sixty (60) days
after the original due date thereof, (ii) ninety (90) days after the date
of the original invoice for them (for accounts with stated terms of less
than sixty (60) days), (iii) one hundred twenty (120) days after the date
of the original invoice for them (for accounts with stated terms of at
least sixty (60) days but less than ninety (90) days or (iv) one hundred
fifty (150) days after the date of the original invoice for them (for
accounts with stated terms of ninety (90) days or more);
(c) such Accounts comply with the terms and conditions contained
in Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on consignment, guaranteed
sale, sale and return, sale on approval, or other terms under which payment
by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect
to such Accounts is located in the United States of America or Canada, or,
at Agent's option, if either: (i) the account debtor has delivered to such
Operating Company an irrevocable letter of credit issued or confirmed by a
bank satisfactory to Agent and payable only in the United States of America
and in U.S. dollars, sufficient to cover such Account, in form and
substance satisfactory to Agent and if required by Agent, the original of
such letter of credit has been delivered to Agent or Agent's agent and the
issuer thereof has acknowledged in writing the assignment of the proceeds
of such letter of credit to Agent, or (ii) such Account is subject to
credit insurance payable to Agent issued by an insurer and on terms and in
an amount acceptable to Agent, or (iii) such Account is otherwise
acceptable in all respects to Agent (subject to such lending formula with
respect thereto as Agent may determine);
(f) such Accounts do not consist of progress xxxxxxxx (such that
the obligation of the account debtors with respect to such Accounts is
conditioned upon such Operating Company's satisfactory completion of any
further performance under the agreement giving rise thereto), xxxx and hold
invoices or retainage invoices, except as to xxxx and hold invoices, if
Agent shall have received an agreement in writing from the account debtor,
in form and substance satisfactory to Agent, confirming the unconditional
obligation of the account debtor to take the goods related thereto and pay
such invoice;
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to any right of setoff or
recoupment against such Accounts (but the portion of the Accounts of such
account debtor in excess of the amount at any time and from time to time
owed by such Operating Company to such account debtor or claimed owed by
such account debtor may be deemed Eligible Accounts);
8
(h) there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce the
amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Agent and any goods giving rise thereto are
not, and were not at the time of the sale thereof, subject to any liens
except those permitted in this Agreement;
(j) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee or
agent of or affiliated with such Operating Company directly or indirectly
by virtue of family membership, ownership, control, management or
otherwise;
(k) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, Canada, any state,
province, political subdivision, department, agency or instrumentality
thereof, unless, if the account debtor is the United States of America or
Canada, any state, province, political subdivision, department, agency or
instrumentality thereof, upon Agent's request, the Federal Assignment of
Claims Act of 1940 or the Financial Administration Act (Canada), as amended
or any similar state, provincial or local law, if applicable, has been
complied with in a manner satisfactory to Agent;
(l) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which
might evidence or result in any material adverse change in any such account
debtor's financial condition (including, without limitation, any
bankruptcy, dissolution, liquidation, reorganization or similar
proceeding);
(m) such Accounts owing by a single account debtor or its Affiliates
to any Operating Company do not constitute more than twenty percent (20%)
of the aggregate amount of all otherwise Eligible Accounts of such
Operating Company (but the portion of the Accounts not in excess of such
percentage may be deemed Eligible Accounts); provided that such percentage
shall be increased to forty percent (40%) to reflect Accounts owing by
Chrysler or Ford to Xxxx Products I, Inc. and Accounts owing by Home Depot
to Deflecto Corporation.
(n) such Accounts are not owed by an account debtor who has Accounts
unpaid pursuant to any criteria set forth in clause (b) of this definition
the aggregate of which constitute more than fifty (50%) percent of the
total Accounts of such account debtor;
(o) such Accounts are owed by account debtors whose total
indebtedness to such Operating Company and its Affiliates does not exceed
the credit limit with respect to such account debtors as determined by
Agent from time to time (but the portion of the Accounts not in excess of
such credit limit may be deemed Eligible Accounts); and
(p) such Accounts are owed by account debtors deemed creditworthy
at all times by Agent, as determined by Agent.
9
General criteria for Eligible Accounts may be established and revised from
time to time by Agent in good faith. Any Accounts which are not Eligible
Accounts shall nevertheless be part of the Collateral.
1.33 "Eligible Xxxx and Hold Accounts" shall mean any Account
arising under xxxx and hold terms which otherwise satisfies all the
criteria in the definition of "Eligible Accounts" but for which the account
debtor obligated thereon has not provided Agent a written acknowledgment
satisfactory to Agent as to the matters set forth in clause (a) of the
definition of "Eligible Accounts."
1.34 "Eligible Equipment" shall mean Equipment of any or all
Operating Companies which (a) have been appraised by an appraiser
acceptable to Agent and which appraisals are satisfactory to Agent as to
form, scope and methodology, (b) do not consist of fixtures, (c) are not
leased, worn-out or obsolete, (d) are subject to the first priority, valid
and perfected security interest of Agent and are subject to no other junior
liens except as permitted under Sections 9.8(b), (c), (g) and (l), (e) are
located on properties which are owned by such Operating Companies or as to
which the lessor of any such property has executed a Collateral Access
Agreement in favor of Agent and (f) are otherwise acceptable to Agent for
inclusion in the Borrowing Base.
1.35 "Eligible Inventory" shall mean Inventory of an Operating
Company consisting of finished goods held for resale in the ordinary course
of the business of such Operating Company, raw materials of such Operating
Company for such finished goods and, in the case of JII Promotions, Inc.
and Valmark Industries, Inc., work in process, in each case which are
acceptable to Agent based on the criteria set forth below. In general,
Eligible Inventory shall not include:
(a) work in process for all Operating Companies other than JII
Promotions and Valmark Industries, Inc.;
(b) components which are not part of finished goods;
(c) spare parts for equipment;
(d) packaging and shipping materials;
(e) supplies used or consumed in such Operating Company's business;
(f) Inventory of such Operating Company at premises other than those
owned and controlled by such Operating Company, except any Inventory which
would otherwise be deemed Eligible Inventory at locations in the United
States of America or Canada which are not owned and operated by such
Operating Company may nevertheless be considered Eligible Inventory: (i) as
to locations which are leased by such Operating Company so long as no
Trigger Event exists or, if a Trigger Event exists, so long as Agent shall
have received a Collateral Access Agreement from the owner and lessor of
such location at which there is more than $500,000 of Inventory, duly
authorized, executed and delivered by such owner and lessor, and (ii) as to
locations owned and operated by a third person, if Agent shall have
received a Collateral Access Agreement from such owner and operator with
respect to such location, duly authorized, executed and delivered by such
owner and operator and, in addition, if required by Agent: (A) UCC-1 and
PPSA financing statements between the owner and operator, as consignee or
bailee and such Operating Company, as consignor or xxxxxx, in form and
substance satisfactory to Agent, which are duly assigned to Agent and (B) a
written notice from such Operating Company and the Agent to, and
10
acknowledged by, the owner and operator disclosing the first priority
security interest in such Inventory of Agent (except, that, in the event
Agent does not receive a Collateral Access Agreement as to any location
leased by such Operating Company or any location owned and operated by a
third party as required above, Agent may, at its option, consider such
Inventory at the location to be Eligible Inventory, provided, that, without
limiting any other rights and remedies of Agent with respect to the
establishment of Reserves or otherwise, Agent may at any time establish
Reserves in respect of amounts at any time payable by such Operating
Company to the owner, lessor or third party operator of such location, as
the case may be);
(g) Inventory subject to a security interest or lien in favor of
any Person other than Agent except those permitted in this Agreement;
(h) xxxx and hold goods;
(i) unserviceable, obsolete or slow moving Inventory;
(j) Inventory which is not subject to the first priority, valid and
perfected security interest of Agent;
(k) returned, damaged and/or defective Inventory; and
(l) Inventory purchased or sold on consignment.
General criteria for Eligible Inventory may be established and revised from
time to time by Agent in good faith based. Any Inventory which is not
Eligible Inventory shall nevertheless be part of the Collateral.
1.36 "Eligible Real Property Related Interests" shall mean the Real
Property Related Interests of any or all Operating Companies which (a) have
been appraised by an appraiser acceptable to Agent and which appraisals are
satisfactory to Agent as to form, scope and methodology, (b) are subject to
the first priority, valid and perfected security interest of Agent and are
subject to no other liens except as permitted under Section 9.8(d) and
junior liens under Sections 9.8(b), (c) and (l) and for which Agent has
received satisfactory local counsel opinions relating to enforceability,
perfection and related matters as Agent and its counsel may require, (c)
have undergone environmental audits (except for the Real Property Related
Interests of Rolite Plastics, Inc. located at 0000 Xxxxx Xxxxx in Midvale,
Ohio and the Real Property Related Interests of Xxxx Products I, Inc.
located at 000 Xxxxxxxx Xxxxxx in Alma, Michigan) conducted by an
environmental engineer acceptable to Agent and satisfactory as to form,
scope and methodology and which audits confirm to the satisfaction of Agent
and its counsel that (i) each applicable Operating Company is in compliance
with all applicable Environmental Laws pertinent to the parcel or parcels
of real property comprising such Eligible Real Property Related Interest in
all material respects and (ii) there is no material liability, contingent
or actual, of any such Operating Companies for any remedial action with
respect to any environmental condition not otherwise insured to the
satisfaction of Agent or for which appropriate reserves have been
11
established to the satisfaction of Agent and (d) are otherwise acceptable
to Agent for inclusion in the Borrowing Base. In addition, no Real Property
Related Interest shall be deemed eligible unless all the agreements,
documents, instruments, certificates, information and records listed in
Part II of Schedule 4.1 with respect to such Real Property Related
Interest, together with any other agreements, documents, instruments or
certificates in respect thereof as Agent may require, shall have been
executed and/or delivered to Agent in form and substance satisfactory to
Agent.
1.37 "Eligible Transferee" shall mean (a) any Lender; (b) any Affiliate
of a Lender; and (c) any other commercial bank, financial institution or
"accredited investor" (as defined in Regulation D under the Securities Act
of 1933) approved by Agent; provided, that, no Credit Party or any
Affiliate of any Credit Party shall qualify as an Eligible Transferee.
1.38 "Environmental Laws" shall mean all foreign, Federal, state,
provincial and local laws (including common law), legislation, rules,
codes, licenses, permits (including any conditions imposed therein),
authorizations, judicial or administrative decisions, injunctions or
agreements between any Credit Party and any Governmental Authority or that
are applicable to any Credit Party, (a) relating to pollution and the
protection, preservation or restoration of the environment (including air,
water vapor, surface water, ground water, drinking water, drinking water
supply, surface land, subsurface land, plant and animal life or any other
natural resource), or to human health or safety, (b) relating to the
exposure to, or the use, storage, recycling, treatment, generation,
manufacture, processing, distribution, transportation, handling, labeling,
production, release or disposal, or threatened release, of Hazardous
Materials, or (c) relating to all laws with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials. The term "Environmental Laws" includes (i) the Federal
Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the
Federal Clean Air Act, the Federal Resource Conservation and Recovery Act
of 1976 (including the Hazardous and Solid Waste Amendments thereto), the
Federal Solid Waste Disposal and the Federal Toxic Substances Control Act,
the Federal Insecticide, Fungicide and Rodenticide Act, and the Federal
Safe Drinking Water Act of 1974, the Canadian Environmental Protection Act
of 1999, (ii) applicable foreign, provincial and state counterparts to such
laws, including, but not limited to, the Natural Resources and
Environmental Protection Act, MCLA 324.101 et seq. and (iii) any common law
or equitable doctrine that may impose liability or obligations for injuries
or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
1.39 "Equipment" shall mean, with respect to any Person, all of such
Person's now owned and hereafter acquired equipment, machinery, computers
and computer hardware and software (whether owned or licensed and including
embedded software), vehicles, tools, furniture, fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.
12
1.40 "Equipment Loan Limit" shall mean an amount determined by Agent on
the Fixed Asset Funding Date, not to exceed $7,839,000, which amount shall be
reduced from time to time pursuant to Section 2.1(d) hereof.
1.41 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, together with all rules, regulations and
interpretations thereunder or related thereto.
1.42 "ERISA Affiliate" shall mean any person required to be aggregated
with Borrower, any other Credit Party or any of their respective Restricted
Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.
1.43 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043(c) of ERISA or the regulations issued thereunder, with respect
to a Plan for which the reporting has not been waived; (b) the adoption of
any amendment to a Plan that would require the provision of security
pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the
existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or
not waived; (d) the filing pursuant to Section 412 of the Code or Section
303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the filing of a notice of intent to
terminate in a distress termination under Section 4041(c) of ERISA, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA with respect to any Plan, or the commencement of proceedings by
the Pension Benefit Guaranty Corporation to terminate a Plan; (f) 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 Plan; and (g) the imposition of liability in
excess of $1,000,000 under Title IV of ERISA, other than the Pension
Benefit Guaranty Corporation premiums due but not delinquent under Section
4007 of ERISA, upon any Credit Party or any ERISA Affiliate.
1.44 "Eurodollar Rate" shall mean with respect to the Interest Period for
a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary,
to the next one-sixteenth (1/16) of one (1%) percent) at which Reference
Bank is offered deposits of United States dollars in the London interbank
market (or other Eurodollar Rate market selected by Borrower and approved
by Agent) on or about 9:00 a.m. (Chicago time) three (3) Business Days
prior to the commencement of such Interest Period in amounts substantially
equal to the principal amount of the Eurodollar Rate Loans requested by and
available to Borrower in accordance with this Agreement, with a maturity of
comparable duration to the Interest Period selected by Borrower.
1.45 "Eurodollar Rate Loan" shall mean a Loan or any portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in
accordance with the terms hereof.
13
1.46 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.47 "Excess Availability" shall mean the amount, as determined by Agent,
calculated at any date, equal to: (a) the lesser of: (i) the Borrowing Base
and (ii) the Maximum Credit, minus (b) the sum of: (i) the amount of all
then outstanding and unpaid Obligations (after giving effect to the
repayments received by Agent in respect of the Obligations on such date),
plus (ii) the aggregate amount of all then outstanding and unpaid trade
payables and other obligations of the Restricted Subsidiaries which are
outstanding more than sixty (60) days after the original due date thereof.
1.48 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or
related thereto.
1.49 "Fee Letter" shall mean the letter agreement, dated of even date
herewith, by and among Borrower and Agent, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
1.50 "Financing Agreements" shall mean, collectively, this Agreement, all
Hedging Agreements and all notes, guarantees, security agreements, pledge
agreements, mortgages and other agreements, documents, instruments and
financing statements now or at any time hereafter executed and/or delivered
by any Credit Party or any other Person in connection with this Agreement
and any Hedging Agreement with a Lender as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed or replaced
from time to time.
1.51 "Fixed Asset Funding Date" shall mean the date on which all the
agreements, documents, instruments, certificates and information set forth
in Part II of Schedule 4.1 have been executed and/or delivered, in form and
substance satisfactory to Agent (unless waived by Agent in writing).
1.52 "Fixed Charge Coverage Ratio" shall mean, with respect to Borrower
and its Restricted Subsidiaries on a consolidated Pro-Forma Basis for any
fiscal period, the ratio of EBITDA to Fixed Charges.
1.53 "Fixed Charges" shall mean, with respect to Borrower and its
Restricted Subsidiaries on a consolidated Pro-Forma Basis for any fiscal
period, (a) the aggregate of all Interest Expense payable in cash for such
period, plus (b) principal payments, lease payments, reimbursement
obligations and redemption obligations, whether paid or accrued, of
Indebtedness which were originally scheduled to be paid during such period,
plus (c) the cash portion of any capital expenditures, whether paid or
accrued and determined in accordance with GAAP, made during such period (to
the extent not already included in clause (b) above), plus (d) payments
under the Tax Sharing Agreement and any management or consulting
agreements, whether paid or accrued, which were originally scheduled to be
paid during such period, plus (e) dividends paid by Borrower during such
period. In calculating the amount of Fixed Charges for any fiscal period,
any amounts accrued and owing by any Credit Party to any of its Affiliates
pursuant to the preceding sentence shall be excluded from the calculation
of Fixed Charges.
14
1.54 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board which are
applicable to the circumstances as of the date of determination
consistently applied and, with respect to the Canadian Guarantors, shall
mean generally accepted accounting principles in Canada as in effect from
time to time as set forth in the opinions and pronouncements of the
relevant Canadian public and private accounting boards and institutes which
are applicable to the circumstances as of the date of determination
consistently applied, except that, for purposes of Sections 9.18 and 9.19
hereof, GAAP shall be determined on the basis of such principles in effect
on the date hereof and consistent with those used in the preparation of the
audited financial statements delivered to Agent prior to the date hereof.
1.55 "Governmental Authority" shall mean any nation or government, any
state, province, 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.
1.56 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable
explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides
and any other kind and/or type of pollutants or contaminants (including
materials which include hazardous constituents), sewage, sludge, industrial
slag, solvents and/or any other similar substances, materials, or wastes
and including any other substances, materials or wastes that are or become
regulated under any Environmental Law (including any that are or become
classified as hazardous or toxic under any Environmental Law).
1.57 "Hedging Agreement" means any and all transactions, agreements or
documents now existing or hereafter entered into, which provides for an
interest rate, credit, commodity or equity swap, cap, floor, collar,
forward foreign exchange transaction, currency swap, cross currency rate
swap, currency option, or any combination of, or option with respect to,
these or similar transactions, for the purpose of hedging any exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security
or currency valuations or commodity prices, in each case entered into by
Borrower or a Restricted Subsidiary as a party and First Union National
Bank as a counterparty or upon Borrower's request, and Agent's consent (not
to be unreasonably withheld) such other Lender party hereto may act as a
counterparty to any such Hedging Agreement
15
1.58 "Indebtedness" shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
such Person or only to a portion thereof) or evidenced by bonds, notes,
debentures or similar instruments; (b) representing the balance deferred
and unpaid of the purchase price of any property or services (except any
such balance that constitutes an account payable to a trade creditor
(whether or not an Affiliate) created, incurred, assumed or guaranteed by
such Person in the ordinary course of business of such Person in connection
with obtaining goods, materials or services that is not overdue by more
than ninety (90) days, unless the trade payable is being contested in good
faith); (c) all obligations as lessee under leases which have been, or
should be, in accordance with GAAP recorded as Capital Leases; (d) any
contractual obligation, contingent or otherwise, of such Person to pay or
be liable for the payment of any indebtedness described in this definition
of another Person, including, without limitation, any such indebtedness,
directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability
or any security therefor, or to provide funds for the payment or discharge
thereof, or to maintain solvency, assets, level of income, or other
financial condition; (e) all obligations with respect to redeemable stock
and redemption or repurchase obligations under any Capital Stock or other
equity securities issued by such Person, except to the extent that the
terms of such redeemable preferred stock, Capital Stock or other equity
securities provide that cumulative dividends or other amounts payable
thereunder are deferred and/or that any other obligations thereunder are
not payable, in each case, during the term of this Agreement by such Person
by virtue of prohibitions therein or by virtue of prohibitions under other
agreements or instruments binding on such Person; (f) all reimbursement
obligations and other liabilities of such Person with respect to surety
bonds (whether bid, performance or otherwise), letters of credit, banker's
acceptances or similar documents or instruments issued for such Person's
account; and (g) all indebtedness of such Person in respect of indebtedness
of another Person for borrowed money or indebtedness of another Person
otherwise described in this definition which is secured by any consensual
lien, security interest, collateral assignment, conditional sale, mortgage,
deed of trust, or other encumbrance on any asset of such Person, whether or
not such obligations, liabilities or indebtedness are assumed by or are a
personal liability of such Person; provided, that for purposes of
determining the amount of Indebtedness that constitutes Indebtedness of
such Person solely by reason of this clause (g), the amount thereof shall
be limited to the greater of the book value or the fair market value of the
assets of such Person securing such other Person's Indebtedness so long as
there is no further recourse to such Person (beyond the assets pledged as
security).
1.59 "Information Certificate" shall mean the Information Certificate of
Parent and Borrower constituting Exhibit C hereto containing material
information with respect to the Credit Parties and their respective
businesses and assets provided by Agent in connection with the preparation
of this Agreement and the other Financing Agreements and the financing
arrangements provided for herein.
1.60 "Intellectual Property" shall mean, with respect to any Person,
all of such Person's now owned and hereafter arising or acquired: patents,
patent rights, patent applications, copyrights, works which are the subject
matter of copyrights, copyright registrations, trademarks, trade names,
trade styles, trademark and service xxxx applications, and licenses and
rights to use any of the foregoing; all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the
foregoing; all rights to xxx for past, present and future infringement of
any of the foregoing; inventions, trade secrets, formulae, processes,
compounds, drawings, designs, blueprints, surveys, reports, manuals, and
operating standards; goodwill; customer and other lists in whatever form
maintained; and trade secret rights, copyright rights, rights in works of
authorship, and contract rights relating to computer software programs, in
whatever form created or maintained.
16
1.61 "Intercompany Loan Agreement" shall mean that certain Intercompany
Loan and Security Agreement dated as of the date hereof among Congress
Financial Corporation (Central), as intercompany collateral agent for the
Lending Companies named therein, the Borrower, the Restricted Subsidiaries
and the Non-Restricted Subsidiaries named therein, as amended, supplemented
or otherwise modified from time to time.
1.62 "Intercompany Loan Balance" shall mean, with respect to any
Operating Company or any Intermediate Holding Company as of any date of
determination, such Person's outstanding balance of Intercompany Loans as
of such date, giving effect to any Intercompany Loan made with proceeds of
Loans advanced to Borrower hereunder so long as such Intercompany Loan is
made immediately after Borrower's receipt of such Loan proceeds but in no
event later than the same Business Day on which Borrower received such Loan
proceeds. In calculating the Intercompany Loan Balance as of any date,
Agent may base such calculation on the Intercompany Loan Balance figures
set forth in the most recent Borrowing Base Certificate and/or such other
financial information and records provided by Borrower to Agent as Agent
deems reliable and accurate.
1.63 "Intercompany Loans" shall mean any secured intercompany loans
advanced by (a) Borrower to any Intermediate Holding Company or Operating
Company, (b) an Intermediate Holding Company to any Operating Company or
(c) an Operating Company to any other Operating Company that is a direct
Subsidiary of such Operating Company, in each case which is subordinated to
the Obligations pursuant to the Affiliate Subordination Agreement and
evidenced by the Intercompany Loan Agreement and a subordinated promissory
note that has been pledged to Agent (along with an assignment of the
security therefore) as security for the Obligations and is on terms and
conditions acceptable to Agent; provided that (i) with respect to any
Intercompany Loan advanced pursuant to clause (c) above, such lending
Operating Company has a corresponding Intercompany Loan payable to an
Intermediate Holding Company or the Borrower on the same terms and
conditions as such Intercompany Loan advanced by such lending Operating
Company for at least the same amount and (ii) with respect to any
Intercompany Loan advanced by an Intermediate Holding Company to an
Operating Company such Intermediate Holding Company has a corresponding
Intercompany Loan payable to Borrower on the same terms and conditions as
such Intercompany Loan advanced by such Intermediate Holding Company for at
least the same amount.
1.64 "Interest Expense" shall mean, with respect to Borrower and its
Restricted Subsidiaries on a consolidated basis for any fiscal period,
interest expense (whether cash or non-cash) of such Persons determined in
accordance with GAAP for the relevant period ended on such date.
17
1.65 "Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), three (3) or six (6) months
duration as Borrower may elect, the exact duration to be determined in
accordance with the customary practice in the applicable Eurodollar Rate
market; provided, that, Borrower may not elect an Interest Period which
will end after the last day of the then-current term of this Agreement.
1.66 "Interest Rate" shall mean,
(a) Subject to clauses (b) and (c) of this definition below:
(i) as to Prime Rate Loans, a rate equal to .05% per annum in
excess of the Prime Rate,
(ii) as to Eurodollar Rate Loans, a rate equal to 2.55% per
annum in excess of the Adjusted Eurodollar Rate (based on the Eurodollar
Rate applicable for the Interest Period selected by Borrower as in effect
three (3) Business Days after the date of receipt by Agent of the request
of Borrower for such Eurodollar Rate Loans in accordance with the terms
hereof, whether such rate is higher or lower than any rate previously
quoted to Borrower), and
(b) Subject to clause (c) of this definition below, effective as
of the first (1st) Business Day of the second month of each fiscal quarter,
after the fiscal quarter ending on or about December 31, 2001, the Interest
Rate payable by Borrower shall be increased or decreased, as the case may
be, (i) as to Prime Rate Loans, to the rate equal to the Applicable Margin
for Prime Rate Loans on a per annum basis in excess of the Prime Rate and
(ii) as to Eurodollar Rate Loans, to the rate equal to the Applicable
Margin for Eurodollar Rate Loans on a per annum basis in excess of the
Adjusted Eurodollar Rate.
(c) Notwithstanding anything to the contrary contained in clauses
(a) and (b) of this definition, the Applicable Margin otherwise used to
calculate the Interest Rate for Prime Rate Loans and Eurodollar Rate Loans
shall be the highest percentage set forth in the definition of the term
Applicable Margin for each category of Loans (without regard to the amount
of Quarterly Average Excess Availability) plus two (2%) percent per annum,
at Agent's option, after notice to Borrower, (i) for the period (A) from
and after the effective date of termination hereof until Agent and Lenders
have received full and final payment of all outstanding and unpaid
Obligations which are not contingent and cash collateral in the amounts and
on the terms required under Section 13.1 hereof for contingent Obligations
(notwithstanding entry of a judgment against Borrower) and (B) from and
after the date of the occurrence of an Event of Default for so long as such
Event of Default is continuing, and (ii) on Revolving Loans to Borrower at
any time outstanding in excess of any limit set forth in Section 2.1(a)
hereof (whether or not such excess(es) arise or are made with or without
Agent's or any Lender's knowledge or consent and whether made before or
after an Event of Default).
1.67 "Intermediate Holding Company" shall mean each of Jordan Automotive
Aftermarket, Inc., Jordan Specialty Plastics, Inc., SPL Holdings, Inc., any
other Restricted Subsidiary of Borrower which is not an Operating Company
but which owns (either individually or collectively with other Restricted
Subsidiaries) over fifty percent (50%) of the Voting Stock of an Operating
Company, and each of their respective permitted successors and permitted
assigns.
18
1.68 "Inventory" shall mean, with respect to any Person, all of such
Person's now owned and hereafter existing or acquired goods, wherever
located, which (a) are leased by such Person as lessor; (b) are held by
such Person for sale or lease or to be furnished under a contract of
service; (c) are furnished by such Person under a contract of service; or
(d) consist of raw materials, work in process, finished goods or materials
used or consumed in its business.
1.69 "Inventory Loan Limit" shall mean $45,000,000.
1.70 "Lenders" shall mean the financial institutions who are
signatories hereto as Lenders and other persons made a party to this
Agreement as a Lender in accordance with Section 13.7 hereof, and their
respective successors and assigns; each sometimes being referred to herein
individually as a "Lender".
1.71 "License Agreements" shall have the meaning set forth in Section
8.11 hereof.
1.72 "Letter of Credit Accommodations" shall mean, collectively, the
letters of credit, merchandise purchase or other guaranties denominated in
a currency acceptable to Agent which are from time to time either (a)
issued or opened by Agent or any Lender for the account of Borrower or
jointly for Borrower and any Operating Company or (b) with respect to which
Agent or Lenders have agreed to indemnify the issuer or guaranteed to the
issuer the performance by Borrower or any Operating Company of its
obligations to such issuer; sometimes being referred to herein individually
as "Letter of Credit Accommodation." As used herein, the term "Letter of
Credit Accommodations" shall refer to the US Dollar Amount of Letter of
Credit Accommodations at any given time.
1.73 "Letter of Credit Limit" shall mean $20,000,000.
1.74 "Loans" shall mean the Revolving Loans.
1.75 "Material Adverse Effect" shall mean (1) a material adverse effect
on the business, assets, financial condition or results of operations of
the Borrower and its Restricted Subsidiaries taken as a whole, (2) a
material impairment of the ability of the Borrower and its Restricted
Subsidiaries to perform their obligations under the Financing Agreements to
which they are parties, which materially impairs the ability of the
Borrower and its Restricted Subsidiaries to perform their obligations under
the Financing Agreements, taken as a whole, or (3) a material impairment of
the rights or benefits of the Lenders under any Financing Agreement which
materially impairs the rights or benefits of the Lenders under the
Financing Agreements, taken as a whole; provided, that for purposes of
Section 9.22 hereof, the term "Material Adverse Effect" shall have the
meaning set forth in Section 9.22 hereof.
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1.76 "Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements or agreements governing Indebtedness),
written or oral, of Borrower or any Restricted Subsidiary involving
monetary liability of or to any Person in an amount in excess of $1,000,000
in any fiscal year and (b) any other contract or other agreement (other
than the Financing Agreements or agreements governing Indebtedness),
whether written or oral, to which Borrower or any Restricted Subsidiary is
a party as to which the breach, nonperformance, cancellation or failure to
renew by any party thereto would have a Material Adverse Effect.
1.77 "Maturity Date" shall the meaning set forth in Section 13.1 hereof.
1.78 "Maximum Credit" shall mean the amount of $110,000,000.
1.79 "Multiemployer Plan" shall mean 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 any Credit Party or any ERISA Affiliate.
1.80 "Net Amount" shall mean the gross amount of Eligible Accounts or
Eligible Xxxx and Hold Accounts, as the context requires, less in each case
(a) sales, excise or similar taxes included in the amount thereof and (b)
returns, discounts, claims, credits and allowances of any nature at any
time issued, owing, granted, outstanding, available or claimed with respect
thereto to the extent not already deducted in determining the gross amount
of Eligible Accounts or Eligible Xxxx and Hold Accounts, as the context
requires.
1.81 "Net Forced Liquidation Value" shall mean, with respect to the
Eligible Equipment of any Operating Company, the estimated net recovery
value as determined by Agent based on the most recent equipment appraisal
report performed by an appraiser acceptable to Agent which reflects the
estimated gross cash value expected by the appraiser to be derived from a
forced sale or disposition at a liquidation of such Eligible Equipment
after deducting all costs, expenses and fees attributable to such sale or
disposition, including, without limitation, all fees, costs and expenses of
any liquidator(s) engaged to conduct such sale or disposition and all costs
and expenses of removing and delivering the same to a purchaser.
1.82 "Net Orderly Liquidation Value" shall mean, with respect to the
Eligible Inventory of any Operating Company, the estimated net recovery
value as determined by Agent based on the most recent Inventory appraisal
report, as applicable, for such Operating Company performed by an appraiser
acceptable to Agent which reflects the estimated net cash value expected by
the appraiser to be derived from a sale or disposition at a liquidation or
going-out-of-business sale of such Eligible Inventory after deducting all
costs, expenses and fees attributable to such sale or disposition,
including, without limitation, all fees, costs and expenses of any
liquidator(s) engaged to conduct such sale or disposition and all costs and
expenses of removing and delivering the same to a purchaser.
1.83 "Non-Restricted Subsidiary" or "Non-Restricted Subsidiaries" shall
mean each Subsidiary of Borrower that is not a Restricted Subsidiary.
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1.84 "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of
every kind, nature and description owing by Borrower or any Obligor to
Agent or any Lender and/or any of their Affiliates, including principal,
interest, charges, fees, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, in each case arising
under this Agreement or any of the other Financing Agreements, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement or after the commencement of
any case or proceeding with respect to Borrower or any other Obligor under
the United States Bankruptcy Code, the Bankruptcy and Insolvency Act
(Canada), the Companies' Creditors Arrangement Act (Canada) or any similar
statute in any jurisdiction (including the payment of interest and other
amounts which would accrue and become due but for the commencement of such
case, whether or not such amounts are allowed or allowable in whole or in
part in such case), whether direct or indirect, absolute or contingent,
joint or several, due or not due, primary or secondary, liquidated or
unliquidated, secured or unsecured, and however acquired by Agent or any
Lender.
1.85 "Obligor" shall mean any guarantor, endorser, acceptor, surety
or other person liable on or with respect to the Obligations or who is the
owner of any property which is security for the Obligations, other than
Borrower.
1.86 "Operating Company" shall mean each of the Persons from time to
time listed on Schedule 1.86 hereto, as such Schedule may be modified from
time to time pursuant to Sections 9.7 and 9.10 hereof.
1.87 "Other Taxes" shall mean 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 of
the other Financing Agreements.
1.88 "Parent" means Jordan Industries, Inc., an Illinois corporation,
and its permitted successors and permitted assigns.
1.89 "Participant" shall mean any financial institution that acquires and
holds a participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of
Section 13.7 of this Agreement governing participations and its successors
and assigns.
1.90 "Payment Accounts" shall mean the Canadian Payment Account and
the US Payment Account.
1.91 "Permits" shall have the meaning set forth in Section 8.7(b) hereof.
1.92 "Permitted Dividends" shall mean that, notwithstanding the fact
that a Trigger Event exists with respect to clause (b) of the definition
thereof, Borrower may make dividend payments to Parent under Section 9.11
hereof during such Trigger Event to be used by Parent to make payments on
Indebtedness incurred by Parent; provided that (a) at the time of making
such dividend payment, Borrower shall have had Average Excess Availability
for the immediately preceding calendar month of at least (i) $15,000,000 if
the date on which such dividend payment is to be made is prior to the
earlier to occur of (A) the Fixed Asset Funding Date or (B) the ninetieth
(90th) day after the date hereof or (ii) $20,000,000 if the date on which
such dividend payment is to be made is after the earlier to occur of (A)
the Fixed Asset Funding Date or (B) the ninetieth (90th) day after the date
hereof; (b) at the time of making such dividend payment, no Event of
Default shall exist or would result from the making of such payment; and
(c) after giving effect to such payment, Borrower shall have Excess
Availability of at least the amount then in effect under clause (b) of the
definition of "Trigger Event."
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1.93 "Permitted Payments" shall mean any payments permitted to be made
under the terms of any agreement, document or instrument evidencing
Indebtedness or obligations in respect of Professional Agreements permitted
to be incurred pursuant to Sections 9.9 and 9.12 hereof, respectively;
provided, that:
(a) with respect to (i) Intercompany Loans and intercompany loans
from Parent to Borrower permitted under Section 9.9(c) hereof and (ii)
Professional Agreements among Parent and/or Affiliates of Parent entered
into pursuant to Section 9.12 hereof, payments thereunder may only be made
if permitted under the Affiliate Subordination Agreement;
(b) with respect to (i) Indebtedness set forth on Schedule 9.9
hereto and (ii) Indebtedness incurred pursuant to Acquisitions under
Section 9.9(f) hereof, if a Trigger Event exists, only regularly scheduled
payments in connection with such Indebtedness may be made in accordance
with the terms of the agreements, documents or instruments evidencing or
giving rise to such Indebtedness as in effect on the date such Trigger
Event occurred after giving effect to any applicable subordination
provisions or agreements; and
(c) with respect to (i) Indebtedness issued to a seller of assets
or stock pursuant to Section 9.9(h) hereof, (ii) Indebtedness consisting of
earn-outs, deferred compensation and similar obligations pursuant to
Section 9.9(l) hereof and (iii) Indebtedness consisting of incentive
arrangements described under Section 9.9(m) hereof, if a Trigger Event
exists pursuant to clause (b) of the definition thereof, then only
regularly scheduled payments in connection with such Indebtedness and
Professional Agreement may be made in accordance with the terms of such
Professional Agreement and the agreements, documents or instruments
evidencing or giving rise to such Indebtedness as in effect on the date of
such Trigger Event, after giving effect to any applicable subordination
provisions or agreements; provided, further, that if a Trigger Event exists
pursuant to clause (a) of the definition thereof, then no payments may be
made in connection with the Indebtedness and Professional Agreements
described under this clause (c).
1.94 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter
S status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
22
1.95 "Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA) subject to Title IV of ERISA other than a Multiemployer Plan which
any Credit Party sponsors, maintains, or to which it makes, is making, or
is obligated to make contributions.
1.96 "PPSA" shall mean the Personal Property Security Act (Ontario), the
Personal Property Security Act (Nova Scotia) and any other applicable
Canadian or provincial personal property security legislation as all such
legislation now exists or may from time to time hereafter be amended,
modified, recodified, supplemented or replaced, together with all rules,
regulations and interpretations thereunder or related thereto.
1.97 "Pre-Tax Net Income" shall mean, with respect to Borrower and its
Restricted Subsidiaries on a consolidated Pro-Forma Basis for any fiscal
period, the aggregate income (or loss) for such period which shall be an
amount equal to sales in such period less the aggregate of any and all
items that are treated as expenses under GAAP (in respect of the types of
expenses) (other than minority interest expense), excluding any deductions
for taxes in such period and excluding extraordinary or one-time gains or
losses (including the sales of Capital Stock or assets), all computed and
calculated in accordance with GAAP and consistent with the calculations of
"income before income taxes, minority interest, equity in earnings of
affiliates, and extraordinary items" as provided to Agent in the
consolidating monthly financial statements of the Operating Companies for
the month ending June 30, 2001.
1.98 "Prime Rate" shall mean the rate from time to time publicly
announced by First Union National Bank, or its successors, as its prime
rate, whether or not such announced rate is the best rate available at such
bank.
1.99 "Prime Rate Loans" shall mean a Loan or any portion thereof on
which interest is payable based on the Prime Rate in accordance with the
terms hereof.
1.100 "Priority Payables Reserve" shall mean, at any time, the full
amount of the liabilities at such time which have a trust imposed to
provide for payment or security interest, lien or charge ranking or capable
of ranking senior to or pari passu with security interests, liens or
charges securing the Obligations on any of the Collateral under federal,
provincial, state, county, municipal, or local law including, but not
limited to, claims for unremitted and accelerated rents, taxes, wages,
workers' compensation obligations, government royalties or pension fund
obligations, together with the aggregate value, determined in accordance
with GAAP, of all Eligible Inventory which Agent, acting reasonably,
considers may be or may become subject to a right of a supplier to recover
possession thereof under any federal or provincial law, where such
supplier's right may have priority over the security interests, liens or
charges securing the Obligations including, without limitation, Eligible
Inventory subject to a right of a supplier to repossess goods pursuant to
Section 81.1 of the Bankruptcy and Insolvency Act (Canada).
1.101 "Professional Agreements" shall mean each of the management
agreements, consulting agreements, transaction advisory agreements and
other similar fee arrangements identified on Schedule 9.12 hereto (as such
Schedule may be modified from time to time pursuant to Section 9.12
hereof), as each such agreement or arrangement may be amended, supplemented
or otherwise modified from time to time as permitted under Section 9.17
hereof.
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1.102 "Pro-Forma Basis" means, for any period and for purposes of
determining "EBITDA," "Pre-Tax Net Income" and the "Fixed Charge Coverage
Ratio," that (i) consolidated sales or net income of any Person shall be
calculated as if all businesses acquired or sold during such period had
been acquired or sold on the first day of such period, (ii) Interest
Expense, for purposes of computing Fixed Charges, shall be calculated on a
pro-forma basis as if all Indebtedness created, incurred, issued, assumed
or repaid during any period was created, incurred, issued, assumed or
repaid on the first day of such period (and in making such pro-forma
calculation, interest on any such Indebtedness at a variable rate shall be
calculated using the rate in effect at the applicable period end), and
(iii) capital expenditures shall be calculated on a pro-forma basis to
include all capital expenditures incurred during such period of all
businesses acquired during such period and to exclude all capital
expenditures incurred during such period of all businesses sold during such
period.
1.103 "Pro Rata Share" shall mean, with respect to all matters relating
to any Lender, (a) with respect to Revolving Loans, the percentage obtained
by dividing (i) the Commitments of that Lender by (ii) the Commitments of
all Lenders, and (b) with respect to all Loans and Letter of Credit
Accommodations on and after the date on which the Commitments have been
terminated, the percentage obtained by dividing (i) the aggregate
outstanding principal balance of the Loans and Letter of Credit
Accommodations held by that Lender, by (ii) the outstanding principal
balance of the Loans and Letter of Credit Accommodations held by all
Lenders.
1.104 "Quarterly Average Excess Availability" shall mean, at any time,
the average amount of Excess Availability for each day in the immediately
preceding fiscal quarter as calculated by Agent.
1.105 "Real Property Loan Limit" shall mean an amount determined by agent
on the Fixed Asset Funding Date, not to exceed $8,661,000, which amount
shall be reduced from time to time pursuant to Section 2.1(d) hereof.
1.106 "Real Property Related Interests" shall mean, with respect to any
Person, all of such Person's now owned and hereafter acquired real property
interests which are related to any real property of such Person, including
leasehold interests, together with all buildings, structures, fixtures, and
other improvements located thereon and all licenses, easements and
appurtenances relating thereto, wherever located.
1.107 "Receivables" shall mean, with respect to any Person: (a) all
of such Person's Accounts; (b) all amounts at any time payable to such
Person in respect of the sale or other disposition by such Person of any
Account or other obligation for the payment of money; (c) all interest,
fees, late charges, penalties, collection fees and other amounts due or to
become due or otherwise payable in connection with any Account of such
Person; (d) all letters of credit, indemnities, guarantees, security or
other deposits and proceeds thereof issued payable to such Person or
otherwise in favor of or delivered to such Person in connection with any
Account; (e) all credit card receivables of such Person; or (f) all payment
intangibles of such Person and all other contract rights, chattel paper,
instruments, notes, general intangibles and other forms of obligations
owing to such Person, whether from the sale and lease of goods or other
property, licensing of any property (including Intellectual Property or
other general intangibles), rendition of services or from loans or advances
by such Person or to or for the benefit of any third person (including
loans or advances to any Affiliates or Subsidiaries of such Person) or
24
otherwise associated with any Accounts, Inventory or general intangibles of
such Person (including, without limitation, choses in action, causes of
action, tax refunds, tax refund claims, any funds which may become payable
to such Person in connection with the termination of any employee benefit
or pension plan and any other amounts payable to such Person from any
employee benefit or pension plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, casualty or any similar types of insurance and any
proceeds thereof and proceeds of insurance covering the lives of employees
on which such Person is beneficiary).
1.108 "Records" shall mean, with respect to any Person, all of such
Person's present and future books of account of every kind or nature,
purchase and sale agreements, invoices, ledger cards, bills of lading and
other shipping evidence, statements, correspondence, memoranda, credit
files and other data relating to such Person's Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and
software storage media and devices, file cabinets or containers in or on
which the foregoing are stored (including any rights of such Person with
respect to the foregoing maintained with or by any other Person).
1.109 "Reference Bank" shall mean First Union National Bank, or such
other bank as Agent may from time to time designate.
1.110 "Refinancing Indebtedness" shall have the meaning set forth in
Section 9.9(h) hereof.
1.111 "Register" shall have the meaning set forth in Section 13.7 hereof.
1.112 "Required Lenders" shall mean Lenders having (a) more than 66-2/3%
of the Commitments of all Lenders or (b) if the Commitments have been
terminated, more than 66 2/3% of the aggregate outstanding amount of all
Loans.
1.113 "Reserves" shall mean as of any date of determination, such
amounts as Agent may from time to time establish in good faith and revise
in good faith reducing the amount of Revolving Loans and Letter of Credit
Accommodations which would otherwise be available to Borrower under the
lending formula(s) provided for herein: (a) to reflect events, conditions,
contingencies or risks which, as determined by Agent in good faith,
adversely affect, either (i) the Collateral or any other property which is
security for the Obligations or its value or (ii) the security interests
and other rights of Agent or any Lender in the Collateral (including the
enforceability, perfection and priority thereof) or (b) to reflect Agent's
good faith belief that any collateral report or financial information
furnished by or on behalf of Borrower or any other Restricted Subsidiary to
Agent is or may have been incomplete, inaccurate or misleading in any
material respect or (c) to reflect outstanding Letter of Credit
25
Accommodations as provided in Section 2.2 hereof or (d) to reflect Agent's
estimate of the amount of any Priority Payables Reserve or (e) to reflect
any risks determined by Agent to exist from the occurrence of a Material
Adverse Effect pursuant to (and as defined in) Section 9.22 hereof or (f)
in respect of any state of facts which Agent determines in good faith
constitutes an Event of Default or may, with notice or passage of time or
both, constitute an Event of Default.
1.114 "Restricted Subsidiary" or "Restricted Subsidiaries" shall mean
each Operating Company, each Intermediate Holding Company, each Person
acquired pursuant to an Acquisition permitted under Section 9.10 hereof
that is either owned by a Restricted Subsidiary or that has been designated
by Borrower as a Restricted Subsidiary at the time of the Acquisition, each
Person formed as a direct Subsidiary of Borrower pursuant to Section
9.10(d)(iii) hereof or as a direct Subsidiary of a Restricted Subsidiary
pursuant to Section 9.10(e)(ii) hereof, Atco Products, Inc. and Pioneer
Paper, Inc.
1.115 "Revolving Loans" shall mean the loans now or hereafter made by
or on behalf of any Lender or by Agent for the ratable account of any Lender
on a revolving basis pursuant to the Credit Facility (involving advances,
repayments and readvances) as set forth in Section 2.1 hereof.
1.116 "Senior Indebtedness Cap" shall mean: (a) with respect to Valmark
Industries, Inc., the amount of $18,000,000 until payment in full and
termination of that certain Non-Negotiable Subordinated Note in the
original principal amount of $4,000,000 issued by Valmark Industries
Holdings, Inc. on January 3, 1994, as amended, restated or otherwise
modified from time to time, (b) with respect to Pamco Painted Tape and
Label Co., the amount of $30,000,000 until payment in full and termination
of those certain Non-Negotiable Subordinated Notes in the original
aggregate principal amount of $4,000,000 issued by Pamco Painted Tape and
Label Co. on April 14 1999, as amended, restated or otherwise modified from
time to time; and (c) with respect to Instachange Displays Limited, the US
Dollar Amount at any time of $18,857,142 (Canadian dollars) until payment
in full and termination of that certain Non-Negotiable Subordinated Note in
the original principal amount of $3,714,285 (Canadian dollars) issued by
IDL Holdings Limited on June 2, 2000, as amended, restated or otherwise
modified from time to time.
1.117 "Special Agent Advances" shall have the meaning set forth in
Section 12.11 hereof.
1.118 "Spot Rate" shall mean, with respect to a currency, the rate
quoted by the Reference Bank as the spot rate for the purchase by the
Reference Bank of such currency with another currency at approximately
10:00 a.m. (Charlotte, North Carolina time) on the date as of which the
foreign exchange computation is made.
1.119 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or
other business entity of which an aggregate of at least a majority of the
outstanding Capital Stock or other interests entitled to vote in the
election of the board of directors of such corporation (irrespective of
whether, at the time, Capital Stock of any other class or classes of such
corporation shall have or might have voting power by reason of the
happening of any contingency), managers, trustees or other controlling
persons, or an equivalent controlling interest therein, of such Person is,
at the time, directly or indirectly, owned by such Person and/or one or
more Subsidiaries of such Person.
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1.120 "Taxes" shall mean any and all present or future taxes, levies,
penalties, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of any Lender,
such taxes (including income taxes, franchise taxes or capital taxes) as
are imposed on or measured by such Lender's net income or capital (or other
taxes imposed in lieu thereof) by any jurisdiction (or any political
subdivision thereof).
1.121 "Tax Sharing Agreement" shall mean that certain Tax Sharing
Agreement among the Parent and its Subsidiaries dated as of June 29, 1994,
as amended restated or otherwise modified from time to time through the
date hereof or hereafter as permitted by this Agreement.
1.122 "Trigger Event" shall mean, at any time, (a) an Event of Default
shall have occurred and/or (b) Excess Availability shall be less than
$10,000,000; provided that such Excess Availability threshold shall be
increased to $15,000,000 upon the earlier to occur of (i) the Fixed Asset
Funding Date or (ii) the ninetieth (90th) day after the date hereof. A
Trigger Event occurring under clause (a) above shall remain in effect until
Agent and the applicable Lenders under Section 11.3 hereof waive such Event
of Default in writing. A Trigger Event occurring under clause (b) above
shall remain in effect until Agent waives such Trigger Event in writing.
1.123 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of Illinois, and any successor statute, together with any regulations
thereunder, in each case as in effect from time to time (except that terms
used herein which are defined in the Uniform Commercial Code as in effect
in the State of Illinois on the date hereof shall continue to have the same
meaning notwithstanding any replacement or amendment of such statute except
as Agent may otherwise determine). References to sections of the UCC shall
be construed to also refer to any successor sections.
1.124 "US Dollar Amount" shall mean, at any time, (a) as to any amount
denominated in United States dollars, the amount thereof at such time, and
(b) as to any amount denominated in any other currency, the equivalent
amount in United States dollars as determined by Agent at such time on the
basis of the Spot Rate for the purchase of United States dollars with such
other currency.
1.125 "US Payment Account" shall have the meaning set forth in Section
6.3(a) hereof.
1.126 "Value" shall mean, as determined by Agent in good faith, with
respect to Inventory, the amount equal to the lower of (a) cost computed on
a first in first out basis in accordance with GAAP or (b) market value
(calculated in accordance with GAAP).
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1.127 "Voting Stock" shall mean with respect to any Person, (a) one
(1) or more classes of Capital Stock of such Person having general voting
powers to elect at least a majority of the board of directors, managers or
trustees of such Person, irrespective of whether at the time Capital Stock
of any other class or classes have or might have voting power by reason of
the happening of any contingency, and (b) any Capital Stock of such Person
convertible or exchangeable without restriction at the option of the holder
thereof into Capital Stock of such Person described in clause (a) of this
definition.
SECTION 2. CREDIT FACILITIES
-----------------
2.1 Revolving Loans.
(a) Subject to and upon the terms and conditions contained herein,
each Lender severally (and not jointly) agrees to fund its Pro Rata Share
of Revolving Loans to Borrower from time to time in amounts requested by
Borrower up to the amount outstanding at any time equal to the lesser of:
(i) the Borrowing Base at such time or (ii) the Maximum Credit at such
time.
(b) Agent may, in its discretion, from time to time, upon not less
than five (5) days prior notice to Borrower, (i) reduce the lending formula
with respect to Eligible Accounts to the extent that Agent determines in
good faith that: (A) the dilution with respect to the Accounts for any
period (based on the ratio of (1) the aggregate amount of reductions in
Accounts other than as a result of payments in cash to (2) the aggregate
amount of total sales) has increased in any material respect or may be
reasonably anticipated to increase in any material respect above historical
levels or (B) the general creditworthiness of account debtors has declined,
or (ii) reduce the lending formula(s) with respect to Eligible Inventory to
the extent that Agent determines that: (A) the number of days of the
turnover of the Inventory for any period has adversely changed in any
material respect or (B) the liquidation value of the Eligible Inventory, or
any category thereof, has decreased, or (C) the nature and quality of the
Inventory has deteriorated. In determining whether to reduce the lending
formula(s), Agent may consider events, conditions, contingencies or risks
which are also considered in determining Eligible Accounts, Eligible
Inventory or in establishing Reserves.
(c) Except in Agent's discretion, with the consent of all Lenders,
the aggregate amount of the Revolving Loans and the Letter of Credit
Accommodations outstanding at any time shall not exceed the Maximum Credit.
In the event that the aggregate amount of the outstanding Revolving Loans
and Letter of Credit Accommodations, exceed the amounts available under the
Borrowing Base, the sublimits for Letter of Credit Accommodations set forth
in Section 2.2(e) or the Maximum Credit, as applicable, such event shall
not limit, waive or otherwise affect any rights of Agent or Lenders in that
circumstance or on any future occasions and Borrower shall, upon demand by
Agent, which may be made at any time or from time to time, repay to Agent
the entire amount of any such excess(es) for which payment is demanded.
(d) The Real Property Loan Limit shall be reduced on the first
Business Day of each month, commencing on the first Business Day of the
first month following the Fixed Asset Funding Date, by an amount sufficient
(assuming a like repayment each month) to reduce the outstanding amount of
the Real Property Loan Limit to zero ($0) by August 1, 2008. Upon the sale
or disposition of any Eligible Real Property Related Interest, the Real
Property Loan Limit shall be reduced by an amount equal to sixty percent
(60%) of the appraised fair market value of such Eligible Real Property
Related Interest as determined by Agent on the Fixed Asset Funding Date.
Each reduction in the Real Property Loan Limit caused by a sale or
28
disposition of a Real Property Related Interest shall be applied to the
remaining installments of reductions on the Real Property Loan Limit in
inverse order of maturity; provided, that on any date on which the
aggregate net proceeds from sales or dispositions of Eligible Real Property
Related Interests through such date (but not including net proceeds
previously calculated hereunder which resulted in ratable reductions to the
remaining installments pursuant to this proviso) are at least $500,000,
Agent shall make an adjustment to the then remaining installments of
reductions on the Real Property Loan Limit (including backing out any
previous installment reductions made in inverse order of maturity if
applicable) by applying the aggregate reduction in the Real Property Loan
Limit resulting from such aggregate sales or dispositions to ratably reduce
the then remaining installments of reductions on the Real Property Loan
Limit.
(e) The Equipment Loan Limit shall be reduced on the first
Business Day of each month, commencing on the first Business Day of the
first month following the Fixed Asset Funding Date, by an amount sufficient
(assuming a like repayment each month) to reduce the outstanding amount of
the Real Property Loan Limit to zero ($0) by August 1, 2006. Upon the sale
or disposition of any Eligible Equipment, the Equipment Loan Limit shall be
reduced by an amount equal to one hundred percent (100%) of the Net Forced
Liquidation Value of such Eligible Equipment as determined by Agent on the
Fixed Asset Funding Date. Each reduction in the Eligible Loan Limit caused
by a sale or disposition of Eligible Equipment shall be applied to the
remaining installments of reductions on the Equipment Loan Limit in inverse
order of maturity; provided, that on any date on which the aggregate net
proceeds from sales or dispositions of Eligible Equipment through such date
(but not including net proceeds previously calculated hereunder which
resulted in ratable reductions to the remaining installments pursuant to
this proviso) are at least $500,000, Agent shall make an adjustment to the
then remaining installments of reductions on the Equipment Loan Limit
(including backing out any previous installment reductions made in inverse
order of maturity if applicable) by applying the aggregate reduction in the
Equipment Loan Limit resulting from such aggregate sales or dispositions to
ratably reduce the then remaining installments of reductions on the
Equipment Loan Limit.
2.2 Letter of Credit Accommodations.
(a) Subject to and upon the terms and conditions contained herein,
at the request of Borrower, Agent agrees, for the ratable risk of each
Lender according to its Pro Rata Share, to provide or arrange for Letter of
Credit Accommodations for the account of Borrower or the joint account of
Borrower and any Operating Company containing terms and conditions
acceptable to Agent and the issuer thereof. Any payments made by or on
behalf of Agent or any Lender to any issuer thereof and/or related parties
in connection with the Letter of Credit Accommodations shall constitute
additional Revolving Loans to Borrower pursuant to this Section 2. To the
extent any payment made pursuant to the immediately preceding sentence is
made in a currency other than United States dollars, the Revolving Loans
advanced to Borrower in connection with such payment shall be equal to the
US Dollar Amount of such payment at the time such payment is made.
29
(b) In addition to any charges, fees or expenses charged by any
bank or issuer in connection with the Letter of Credit Accommodations,
Borrower shall pay to Agent, for the benefit of Lenders, a letter of credit
fee at a rate equal to one and one-half percent (1.5%) per annum on the
daily outstanding balance of the Letter of Credit Accommodations for the
immediately preceding month (or part thereof), payable in arrears as of the
first day of each succeeding month, except that Agent may, and upon the
written direction of Required Lenders shall, require Borrower to pay to
Agent for the ratable benefit of Lenders such letter of credit fee, at a
rate equal to three and one-half percent (3.5%) per annum on such daily
outstanding balance for: (i) the period from and after the date of
termination or non-renewal hereof until Agent and Lenders have received
full and final payment of all Revolving Obligations (notwithstanding entry
of a judgment against Borrower) and cash collateral for contingent
Obligations in accordance with Section 13.1 hereof and (ii) the period from
and after the date of the occurrence of an Event of Default for so long as
such Event of Default is continuing as determined by Agent. Such letter of
credit fee shall be calculated on the basis of a three hundred sixty (360)
day year and actual days elapsed and the obligation of Borrower to pay such
fee shall survive the termination or non-renewal of this Agreement.
(c) Borrower shall give Agent two (2) Business Days' prior written
of Borrower's request for the issuance of a Letter of Credit Accommodation.
Such notice shall be irrevocable and shall specify the original face amount
of the Letter of Credit Accommodation requested, the identity of the
Operating Company (if in connection with a joint account with Borrower) the
effective date (which date shall be a Business Day) of issuance of such
requested Letter of Credit Accommodation, whether such Letter of Credit
Accommodations may be drawn in a single or in partial draws, the date on
which such requested Letter of Credit Accommodation is to expire (which
date shall be a Business Day), the purpose for which such Letter of Credit
Accommodation is to be issued, and the beneficiary of the requested Letter
of Credit Accommodation.
(d) In addition to being subject to the satisfaction of the
applicable conditions precedent contained in Section 4 hereof and the other
terms and conditions contained herein, no Letter of Credit Accommodations
shall be available unless each of the following conditions precedent have
been satisfied in a manner satisfactory to Agent: (i) Borrower shall have
delivered to the proposed issuer of such Letter of Credit Accommodation at
such times and in such manner as such proposed issuer may require, an
application, in form and substance satisfactory to such proposed issuer and
Agent, for the issuance of the Letter of Credit Accommodation and such
other documents as may be required pursuant to the terms thereof, and the
form and terms of the proposed Letter of Credit Accommodation shall be
satisfactory to Agent and such proposed issuer, (ii) as of the date of
issuance, no order of any court, arbitrator or other Governmental Authority
shall purport by its terms to enjoin or restrain money center banks
30
generally from issuing letters of credit of the type and in the amount of
the proposed Letter of Credit Accommodation, 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 Accommodation
refrain from, the issuance of letters of credit generally or the issuance
of such Letters of Credit Accommodation; and (iii) the Excess Availability,
prior to giving effect to any Reserves with respect to such Letter of
Credit Accommodations, on the date of the proposed issuance of any Letter
of Credit Accommodations, shall be equal to or greater than: (A) if the
proposed Letter of Credit Accommodation is for the purpose of purchasing
Eligible Inventory and the documents of title with respect thereto are
consigned to the issuer, the sum of (1) the percentage equal to one hundred
(100%) percent minus the then applicable percentage with respect to
Eligible Inventory set forth in the definition of the term Borrowing Base
multiplied by the Value or Net Orderly Liquidation Value, as applicable, of
such Eligible Inventory, plus (2) freight, taxes, duty and other amounts
which Agent estimates in good faith must be paid in connection with such
Inventory upon arrival and for delivery to one of the applicable Operating
Company's locations for Eligible Inventory within the United States of
America or Canada and (B) if the proposed Letter of Credit Accommodation is
for any other purpose or the documents of title are not consigned to the
issuer in connection with a Letter of Credit Accommodation for the purpose
of purchasing Inventory, an amount equal to one hundred (100%) percent of
the face amount thereof and all other commitments and obligations made or
incurred by Agent with respect thereto. Effective on the issuance of each
Letter of Credit Accommodation, a Reserve shall be established in the
applicable amount set forth in Section 2.2(d)(iii)(A) or Section
2.2(d)(iii)(B).
(e) Except in Agent's discretion, with the consent of all Lenders,
the amount of all outstanding Letter of Credit Accommodations and all other
commitments and obligations made or incurred by Agent or any Lender in
connection therewith shall not at any time exceed the Letter of Credit
Limit. At any time an Event of Default exists or has occurred and is
continuing, upon Agent's request, Borrower will either furnish cash
collateral to secure the reimbursement obligations to the issuer in
connection with any Letter of Credit Accommodations or furnish cash
collateral to Agent, for the ratable benefit of Lenders, for the Letter of
Credit Accommodations.
(f) Borrower shall indemnify and hold Agent and Lenders harmless
from and against any and all losses, claims, damages, liabilities, costs
and expenses which Agent or any Lender may suffer or incur in connection
with any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation. Borrower
assumes all risks with respect to the acts or omissions of the drawer under
or beneficiary of any Letter of Credit Accommodation and for such purposes
the drawer or beneficiary shall be deemed Borrower's agent. Borrower
assumes all risks for, and agrees to pay, all foreign, Federal, State and
local taxes, duties and levies relating to any goods subject to any Letter
of Credit Accommodations or any documents, drafts or acceptances
thereunder. Borrower hereby releases and holds Agent and Lenders harmless
from and against any acts, waivers, errors, delays or omissions, whether
caused by Borrower, any Operating Company, by any issuer or correspondent
or otherwise with respect to or relating to any Letter of Credit
31
Accommodation. Notwithstanding anything to the contrary contained in this
Section 2.2, Borrower shall have no obligation to indemnify Agent, any
Lender, and issuer or any correspondent in respect of any liability
incurred by any of them arising out of their own respective gross
negligence of willful misconduct in the performance of any duties with
respect to Letter of Credit Accommodations. Nothing in this Agreement shall
relieve any issuer or any correspondent of any liability to Borrower or any
Operating Company that might otherwise exist in accordance with the terms
and conditions of the agreements, documents and instruments evidencing the
Letter of Credit Accommodations. The provisions of this Section 2.2(f)
shall survive the payment of Obligations and the termination or non-renewal
of this Agreement.
(g) In connection with Inventory purchased pursuant to Letter of
Credit Accommodations, Borrower shall, at Agent's request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others
receiving or holding cash, checks, Inventory, documents or instruments in
which Agent holds a security interest to deliver them to Agent and/or
subject to Agent's order, and if they shall come into Borrower's or any
Operating Company's possession, to deliver them, upon Agent's request, to
Agent in their original form. Borrower shall also, at Agent's request,
designate, or cause any Operating Company to designate, Agent as the
consignee on all bills of lading and other negotiable and non-negotiable
documents.
(h) Borrower hereby irrevocably authorizes and directs, and shall
cause each Operating Company to authorize and direct, any issuer of a
Letter of Credit Accommodation to deliver to Agent all instruments,
documents and other writings and property received by issuer pursuant to
the Letter of Credit Accommodations and to accept and rely upon Agent's
instructions and agreements with respect to all matters arising in
connection with the Letter of Credit Accommodations or the applications
therefor. Nothing contained herein shall be deemed or construed to grant
Borrower or any Operating Company any right or authority to pledge the
credit of Agent or any Lender in any manner. Agent and Lenders shall have
no liability of any kind with respect to any Letter of Credit Accommodation
provided by an issuer other than Agent or any Lender unless Agent has duly
executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit
Accommodation. Borrower shall be bound by any reasonable interpretation
made in good faith by Agent, or any other issuer or correspondent under or
in connection with any Letter of Credit Accommodation or any documents,
drafts or acceptances thereunder, notwithstanding that such interpretation
may be inconsistent with any instructions of Borrower. Agent shall have the
sole and exclusive right and authority to, and Borrower shall not, and
shall not permit any Operating Company to, at any time an Event of Default
exists or has occurred and is continuing, (i) approve or resolve any
questions of non-compliance of documents, (ii) give any instructions as to
acceptance or rejection of any documents or goods, (iii) execute any and
all applications for steamship or airway guaranties, indemnities or
delivery orders, (iv) grant any extensions of the maturity of, time of
payment for, or time of presentation of, any drafts, acceptances, or
documents or (v) agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions
of any of the applications, Letter of Credit Accommodations, or documents,
drafts or acceptances thereunder or any letters of credit included in the
Collateral. Agent may take such actions either in its own name, in
Borrower's name or in any Operating Company's name.
32
(i) Any rights, remedies, duties or obligations granted or
undertaken by Borrower to any issuer or correspondent in any application
for any Letter of Credit Accommodation, or any other agreement in favor of
any issuer or correspondent relating to any Letter of Credit Accommodation,
shall be deemed to have been granted or undertaken by Borrower to Agent for
the ratable benefit of Lenders. Any duties or obligations undertaken by
Agent to any issuer or correspondent in any application for any Letter of
Credit Accommodation, or any other agreement by Agent in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation,
shall be deemed to have been undertaken by Borrower to Agent for the
ratable benefit of Lenders and to apply in all respects to Borrower.
(j) Immediately upon the issuance or amendment of any Letter of
Credit Accommodation, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation to the extent of such Lender's Pro
Rata Share of the liability with respect to such Letter of Credit
Accommodation (including, without limitation, all Obligations with respect
thereto).
(k) Borrower is irrevocably and unconditionally obligated, without
presentment, demand or protest, to pay to Agent any amounts paid by an
issuer of a Letter of Credit Accommodation with respect to such Letter of
Credit Accommodation (whether through the borrowing of Revolving Loans in
accordance with Section 2.2(a) or otherwise). In the event that Borrower
fails to pay Agent on the date of any payment under a Letter of Credit
Accommodation in an amount equal to the amount of such payment, Agent (to
the extent it has actual notice thereof) shall promptly notify each Lender
of the unreimbursed amount of such payment and each Lender agrees, upon one
(1) Business Day's notice, to fund to Agent the purchase of its
participation in such Letter of Credit Accommodation in an amount equal to
its Pro Rata Share of the unpaid amount. The obligation of each Lender to
deliver to Agent an amount equal to its respective participation pursuant
to the foregoing sentence is absolute and unconditional and such remittance
shall be made notwithstanding the occurrence or continuance of any Event of
Default, the failure to satisfy any other condition set forth in Section 4
or any other event or circumstance. If such amount is not made available by
a Lender when due, Agent shall be entitled to recover such amount on demand
from such Lender with interest thereon, for each day from the date such
amount was due until the date such amount is paid to Agent at the interest
rate then payable by Borrower in respect of Revolving Loans that are Prime
Rate Loans as set forth in Section 3.1(a) hereof.
2.3 Commitments. The aggregate amount of each Lender's Pro Rata Share of
the Revolving Loans and Letter of Credit Accommodations shall not exceed
the amount of such Lender's Commitments, as the same may from time to time
be amended in accordance with the provisions hereof.
2.4 Availability Reserves. All Revolving Loans otherwise available to
Borrower pursuant to the lending formulas and subject to the Maximum Credit
and other applicable limits hereunder shall be subject to Agent's
continuing right to establish and revise Reserves.
33
SECTION 3. INTEREST AND FEES
-----------------
3.1 Interest.
(a) Borrower shall pay to Agent, for the benefit of Lenders, interest
on the outstanding principal amount of the Loans at the Interest Rate. All
interest accruing hereunder on and after the date of any Event of Default
or termination hereof shall be payable on demand.
(b) Borrower may from time to time request Eurodollar Rate Loans or
may request that Prime Rate Loans be converted to Eurodollar Rate Loans or
that any existing Eurodollar Rate Loans continue for an additional Interest
Period. Such request from Borrower shall specify the amount of the
Eurodollar Rate Loans or the amount of the Prime Rate Loans to be converted
to Eurodollar Rate Loans or the amount of the Eurodollar Rate Loans to be
continued (subject to the limits set forth below) and the Interest Period
to be applicable to such Eurodollar Rate Loans. Subject to the terms and
conditions contained herein, three (3) Business Days after receipt by Agent
of such a request from Borrower, such Eurodollar Rate Loans shall be
advanced or such Prime Rate Loans shall be converted to Eurodollar Rate
Loans or such Eurodollar Rate Loans shall continue, as the case may be,
provided, that, (i) no Event of Default, or act, condition or event which
with notice or passage of time or both would constitute an Event of Default
shall exist or have occurred and be continuing, (ii) Borrower shall have
complied with such customary procedures as are reasonably established by
Agent and specified by Agent to Borrower from time to time for requests by
Borrower for Eurodollar Rate Loans, (iii) no more than five (5) Interest
Periods may be in effect at any one time, (iv) the aggregate amount of the
Eurodollar Rate Loans must be in an amount not less than $2,000,000 or an
integral multiple of $500,000 in excess thereof and (v) Agent and each
Lender shall have determined that the Interest Period or Adjusted
Eurodollar Rate is available to Agent and such Lender and can be readily
determined as of the date of the request for such Eurodollar Rate Loan by
Borrower. Any request by Borrower for Eurodollar Rate Loans or to convert
Prime Rate Loans to Eurodollar Rate Loans or to continue any existing
Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to the
contrary contained herein, Agent and Lenders shall not be required to
purchase United States Dollar deposits in the London interbank market or
other applicable Eurodollar Rate market to fund any Eurodollar Rate Loans,
but the provisions hereof shall be deemed to apply as if Agent and Lenders
had purchased such deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless Agent
has received and approved a request to continue such Eurodollar Rate Loan at
least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon
notice by Agent to Borrower, be immediately converted to Prime Rate Loans
in the event that (i) an Event of Default or event which, with the notice
or passage of time, or both, would constitute an Event of Default, shall
exist or (ii) this Agreement shall terminate or not be renewed. Borrower
shall pay to Agent, for the benefit of Lenders, upon demand by Agent (or
Agent may, at its option, charge any loan account of Borrower) any amounts
required to compensate any Lender or Participant for any loss (including
loss of anticipated profits), cost or expense incurred by such person, as a
result of the conversion of Eurodollar Rate Loans to Prime Rate Loans
pursuant to any of the foregoing.
34
(d) Interest shall be payable by Borrower to Agent, for the benefit
of Lenders, monthly in arrears not later than the first day of each calendar
month and shall be calculated on the basis of a three hundred sixty (360)
day year and actual days elapsed. The interest rate on non-contingent
Obligations (other than Eurodollar Rate Loans) shall increase or decrease
by an amount equal to each increase or decrease in the Prime Rate effective
on the first day of the month after any change in such Prime Rate is
announced based on the Prime Rate in effect on the last day of the month in
which any such change occurs. In no event shall charges constituting
interest payable by Borrower to Agent and Lenders exceed the maximum amount
or the rate permitted under any applicable law or regulation, and if any
such part or provision of this Agreement is in contravention of any such
law or regulation, such part or provision shall be deemed amended to
conform thereto.
3.2 Other Fees.
(a) Borrower shall pay to Agent, for the account of Lenders, monthly
an unused line fee at a rate equal to one-eighth of one percent (0.125%) per
annum calculated upon the amount by which the Maximum Credit as then in
effect exceeds the average daily principal balance of the outstanding Loans
and Letter of Credit Accommodations during the immediately preceding month
(or part thereof) while this Agreement is in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be
payable on the first day of each month in arrears.
(b) Borrower agrees to pay to Agent the other fees and amounts set
forth in the Fee Letter in the amounts and at the times specified therein.
3.3 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein, the
Eurodollar Rate Loans of any Lender shall, upon notice by Agent to
Borrower, convert to Prime Rate Loans in the event that (i) any change in
applicable law or regulation (or the interpretation or administration
thereof) shall either (A) make it unlawful for such Lender to make or
maintain Eurodollar Rate Loans or to comply with the terms hereof in
connection with the Eurodollar Rate Loans, or (B) result in the increase in
the costs to such Lender of making or maintaining any Eurodollar Rate Loans
by an amount deemed by Agent to be material, or (C) reduce the amounts
received or receivable by such Lender in respect thereof, by an amount
deemed by Agent to be material or (ii) the cost to such Lender of making or
maintaining any Eurodollar Rate Loans shall otherwise increase by an amount
deemed by Agent to be material. Borrower shall pay to Agent, for the
ratable benefit of Lenders, upon demand by Agent (or Agent may, at its
option, charge any loan account of Borrower) any amounts required to
compensate any Lender for any loss (including loss of anticipated profits),
cost or expense incurred by such person as a result of the foregoing,
including, without limitation, any such loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds
acquired by such person to make or maintain the Eurodollar Rate Loans or
any portion thereof. A certificate of Agent or the applicable Lender
setting forth the basis for the determination of such amount necessary to
compensate such Lender as aforesaid shall be delivered to Borrower and
shall be presumptive evidence of such amount.
35
(b) If any payments or prepayments in respect of the Eurodollar Rate
Loans are received by Agent or any Lender other than on the last day of the
applicable Interest Period (whether pursuant to acceleration, upon maturity
or otherwise), including any payments pursuant to the application of
collections under Section 6.3 or any other payments made with the proceeds
of Collateral, Borrower shall pay to Agent, upon demand by Agent (or Agent
may, at its option, charge any loan account of Borrower) any amounts
required to compensate any Lender or Participant for any additional loss
(including loss of anticipated profits), cost or expense incurred by such
person as a result of such prepayment or payment, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such person to make
or maintain such Eurodollar Rate Loans or any portion thereof. A
certificate of Agent or the applicable Lender setting forth the basis for
the determination of such amount necessary to compensate such Lender shall
be delivered to Borrower and shall be presumptive evidence of such amount.
(c) If any Lender delivers notice pursuant to Sections 3.3(a) and
3.3(b) above in which such Lender asserts a claim for compensation which claim
is not being asserted by the other Lenders, Borrower may require within 90
days of receiving such notice, at its expense, that such Lender assign, at
par, without recourse (in accordance with Section 13.7(a) hereof) all of
its interests, rights and obligations hereunder and under the other
Financing Agreements (including all of its Commitments and the Loans at the
time owing to it and any participations in Loans held by it) to an Eligible
Transferee proposed by Borrower (a "Substitute Lender"), provided, that (i)
no Event of Default shall exist at the time of such assignment, (ii) such
assignment shall not conflict with or violate any law, rule or regulation
or order of any court or other governmental authority, (iii) Borrower shall
have received the written consent of Agent to such assignment (which
consent shall not be unreasonably withheld or delayed) and (iv) Borrower
shall have paid to the assigning Lender all monies accrued and owing
hereunder to it (including pursuant to Sections 3.3(a) and 3.3(b) above.
(d) Promptly after any Lender becomes aware of any circumstance that
will, in its sole judgment, result in a request for increased compensation
pursuant to Sections 3.3(a) and 3.3(b) above, such Lender shall notify the
Borrower thereof. Each Lender will use reasonable efforts to designate a
lending office (or a different lending office), so long as such designation
is not adverse to such Lender in such Lender's sole judgment, if such
designation would avoid the need to, or reduce the amount which would be
required to, compensate such Lender for any additional costs incurred or
reductions suffered. Failure on the part of any Lender to so notify
Borrower or to demand compensation for any increased costs in amounts
received or receivable with respect to any period shall not constitute a
waiver of such Lender's right to demand compensation with respect to such
period or any other period.
SECTION 4. CONDITIONS PRECEDENT
--------------------
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Agent and
Lenders making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
36
(a) no material adverse change shall have occurred in the assets,
business or prospects of Borrower or any Obligor since the date of Agent's
latest field examination and no change or event shall have occurred which
would impair the ability of Borrower or any Obligor to perform its
obligations hereunder or under any of the other Financing Agreements to
which it is a party or of Agent to enforce the Obligations or realize upon
the Collateral;
(b) Agent shall have completed a field review of the Records and such
other information with respect to the Collateral as Agent may reasonably
require to determine the amount of Loans available to Borrower, the results
of which each case shall be satisfactory to Agent, not more than three (3)
Business Days prior to the date hereof;
(c) the Excess Availability as determined by Agent, as of the date
hereof, shall be not less than $10,000,000 after giving effect to the initial
Revolving Loans made or to be made and Letter of Credit Accommodations
issued or to be issued in connection with the initial transactions
hereunder;
(d) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent has a valid perfected first priority security
interest in all of the Collateral;
(e) Agent and each Lender shall have received approval of the
transactions contemplated by this Agreement and the other Financing Agreements
from their respective credit committees; and
(f) this Agreement, the other Financing Agreements and all other
instruments, documents, certificates, agreements, information and records
listed in Part I of Schedule 4.1 shall have been duly executed and/or
delivered to Agent, in form and substance satisfactory to Agent.
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent to
the Loans and/or providing Letter of Credit Accommodations to Borrower,
including the initial Loans and Letter of Credit Accommodations and any future
Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been
made on and as of the date of the making of each such Loan or providing
each such Letter of Credit Accommodation and after giving effect thereto,
except to the extent that such representations and warranties expressly
relate solely to an earlier date (in which case such representations and
warranties shall have been true and accurate on and as of such earlier
date);
(b) no law, regulation, order, judgment or decree of any Governmental
Authority shall exist, and no action, suit, investigation, litigation or
proceeding shall be pending or threatened in any court or before any
arbitrator or Governmental Authority, which (i) purports to enjoin,
prohibit, restrain or otherwise affect (A) the making of the Loans or
providing the Letter of Credit Accommodations, or (B) the consummation of
the transactions contemplated pursuant to the terms hereof or the other
Financing Agreements or (ii) has or has a reasonable likelihood of having a
Material Adverse Effect; and
(c) no Event of Default and no act, condition or event which, with
notice or passage of time or both, would constitute an Event of Default, shall
exist or have occurred and be continuing on and as of the date of the
making of such Loan or providing each such Letter of Credit Accommodation
and after giving effect thereto.
37
SECTION 5. GRANT OF SECURITY INTEREST
--------------------------
To secure payment and performance of all Obligations, Borrower
hereby grants to Agent, for itself and the ratable benefit of Lenders, a
continuing security interest in, a lien upon, and a right of set off
against, and hereby assigns to Agent, for itself and the ratable benefit of
Lenders, as security, all personal property of the Borrower including the
following property and interests in property of Borrower, whether now owned
or hereafter acquired or existing, and wherever located (together with all
other collateral security for the Obligations at any time granted to or
held or acquired by Agent or any Lender):
(a) Receivables;
(b) all other present and future general intangibles (including
Intellectual Property and existing and future leasehold interests in
equipment, real estate and fixtures), chattel paper, documents,
instruments, investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts), letters of credit, bankers'
acceptances and guaranties;
(c) all present and future monies, securities and other investment
property, credit balances, deposits, deposit accounts and other property of
Borrower now or hereafter held or received by or in transit to Agent, any
Lender or their Affiliates or at any other depository or other institution
from or for the account of Borrower, whether for safekeeping, pledge,
custody, transmission, collection or otherwise, and all present and future
liens, security interests, rights, remedies, title and interest in, to and
in respect of Receivables and other Collateral, including (i) rights and
remedies under or relating to guaranties, contracts of suretyship, letters
of credit and credit and other insurance related to the Collateral, (ii)
rights of stoppage in transit, replevin, repossession, reclamation and
other rights and remedies of an unpaid vendor, lien or secured party, (iii)
goods described in invoices, documents, contracts or instruments with
respect to, or otherwise representing or evidencing, Receivables or other
Collateral, including returned, repossessed and reclaimed goods, and (iv)
deposits by and property of account debtors or other persons securing the
obligations of account debtors;
(d) Inventory;
(e) Equipment;
(f) Real Property Related Interests;
(g) Records; and
(h) all products and proceeds of the foregoing, in any form, including
insurance proceeds and all claims against third parties for loss or damage
to or destruction of any or all of the foregoing.
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SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Loan Accounts and Intercompany Loan Accounts.
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(a) Agent shall maintain one or more loan account(s) on its books in
which shall be recorded (i) all Loans, Letter of Credit Accommodations and
other Obligations, (ii) all payments made by or on behalf of Borrower or
any Obligor in respect of the Obligations and (iii) all other appropriate
debits and credits as provided in this Agreement, including fees, charges,
costs, expenses and interest. All entries in the loan account(s) shall be
made in accordance with Agent's customary practices as in effect from time
to time. The Revolving Loans shall be evidenced by the loan accounts
maintained by Agent; provided that if any Lender so requests, the Borrower
will execute a promissory note in favor of such Lender further evidencing
such Lender's Commitment. Agent is authorized by all the parties hereto to
make all revisions and modifications to Schedule 2 hereto at any time to
reflect the then current Commitments of each Lender.
(b) Borrower shall, and shall cause each Restricted Subsidiary to,
maintain accurate and current loan accounts on its books on which shall be
recorded (i) all Intercompany Loans and Intercompany Loan Balances, (b) all
payments made with respect to any Intercompany Loan and (c) all other
appropriate debits and credits to such Intercompany Loans as are permitted
under this Agreement.
(c) Borrower shall, and shall cause each Restricted Subsidiary to,
evidence each Intercompany Loan with a subordinated promissory note, the
obligations of which shall be secured by a junior lien (subject only to those
liens which are specifically designated under Sections 9.8(a), (b), (c), (d),
(e), (f), (i), (j), (k) and (l) hereof or which are designated on Schedule
9.8 hereto as being senior in priority to the liens of Agent) on all the
assets of each Restricted Subsidiary or Intermediate Holding Company, as
applicable, and Borrower shall, and shall cause each Restricted Subsidiary
to, execute such security agreements, financing statements and other
documents necessary to perfect such security interests. Each agreement,
document and instrument executed in connection with the preceding sentence
shall be in form and substance satisfactory to Agent and shall be assigned
to Agent, for the benefit of Agent and the Lenders, as collateral security
for the Obligations. If the Intercompany Loan Balance in connection with
any Intercompany Loan shall increase above the amount permitted in the
applicable promissory note or other related documents evidencing such
Intercompany Loan, Borrower shall, and shall cause each Restricted
Subsidiary to, as applicable, execute such amendments, restatements or
other documents, agreements or instruments as shall be required (or
requested by Agent) to reflect such modifications and all such amendments,
restatements and other documents, agreements and instruments shall be
assigned to Agent as collateral security for the Obligations. Upon Agent's
demand, Borrower shall, and shall cause each Restricted Subsidiary to,
confirm any and all Intercompany Loan Balances in connection with any
Intercompany Loan and provide such journal registers showing all entries or
other supporting back-up materials as Agent shall request in support of
such Intercompany Loan Balances. Borrower shall, and shall cause each
Restricted Subsidiary to, make appropriate book and journal entries
reflecting Intercompany Loans. To the extent proceeds of any Intercompany
Loan made by Borrower to an Intermediate Holding Company or to an Operating
Company are to be concurrently relent by such Intermediate Holding Company
or such Operating Company as an Intercompany Loan to an Operating Company
(that is a direct Subsidiary of such Intermediate Holding Company or such
Operating Company), then, for purposes of administrative convenience,
Borrower may advance such proceeds directly to such Operating Company so
long as Borrower makes, and causes such Intermediate Holding Company and
each applicable Operating Company to make, appropriate book and journal
entries to reflect an Intercompany Loan made from Borrower to such
Intermediate Holding Company or such Operating Company and an Intercompany
Loan made from such Intermediate Holding Company or such Operating Company
to any Operating Company (that is a direct Subsidiary of such Intermediate
Holding Company or such Operating Company).
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6.2 Statements. Agent shall render to Borrower each month a statement
setting forth the balance in the Borrower's loan account(s) maintained by
Agent for Borrower pursuant to the provisions of this Agreement, including
principal, interest, fees, costs and expenses. Each such statement shall be
subject to subsequent adjustment by Agent but shall, absent manifest errors
or omissions, be considered correct and deemed accepted by Borrower and
conclusively binding upon Borrower as an account stated except to the
extent that Agent receives a written notice from Borrower of any specific
exceptions of Borrower thereto within thirty (30) days after the date such
statement has been mailed by Agent. Until such time as Agent shall have
rendered to Borrower a written statement as provided above, the balance in
Borrower's loan account(s) shall be presumptive evidence of the amounts due
and owing to Agent and Lenders by Borrower.
6.3 Collection of Accounts.
(a) Borrower shall establish and maintain at its expense a depository
concentration account (the "Concentration Account") at Northern Trust Bank
(or such other financial institution that is acceptable to Agent). Borrower
shall cause each Restricted Subsidiary to establish and maintain at its
expense at Northern Trust Bank (or such other financial institution that is
acceptable to Agent) a depository account (each, a "Depository Account")
into which, following the occurrence of a Trigger Event under clause (a) of
the definition thereof or following notice from Agent upon the occurrence
of a Trigger Event under clause (b) of the definition thereof, Borrower
shall cause each Restricted Subsidiary to promptly deposit and direct its
account debtors to directly remit all payments on its Receivables and all
payments constituting proceeds of its Inventory or other Collateral in the
identical form in which such payments are made, whether by cash, check or
other manner. Following the occurrence of a Trigger Event under clause (a)
of the definition thereof or following notice from Agent upon the
occurrence of a Trigger Event under clause (b) of the definition thereof,
Borrower shall (i) cause each Restricted Subsidiary to transfer funds in
its Depository Account to the Concentration Account on a daily basis;
provided that with respect to any Depository Account maintained by any
Restricted Subsidiary in a financial institution's branch in Canada,
Borrower shall cause such Restricted Subsidiary to transfer funds in such
Depository Account to such account of Agent or Agent's affiliates
maintained at such financial institution's branch in Canada (the "Canadian
Payment Account") on a daily basis and (ii) not withdraw or otherwise issue
checks or other payment instruments against funds deposited in the
Concentration Account or permit any Restricted Subsidiary to withdraw or
otherwise issue checks or other payment instruments against funds deposited
in such Restricted Subsidiary's Depository Account. Each bank at which a
Depository Account, the Concentration Account or any other account (other
than those accounts described in clauses (b) and (c) of Section 9.13
hereof) is established shall enter into an agreement, in form and substance
satisfactory to Agent, providing that all items received or deposited in
such accounts are subject to the lien of Agent and that the depository bank
has no lien upon, or right to setoff against, such accounts, the items
received for deposit therein or the funds from time to time on deposit
therein. Each depository bank at which a Depository Account is maintained
shall further agree to wire, or otherwise transfer, in immediately
available funds, on a daily basis, all funds received or deposited into the
Depository Account and such other accounts to the Concentration Account (or
to the Canadian Payment Account in the case of Depository Accounts and
other accounts maintained at any financial institution's branch in Canada)
upon its receipt of notice from the Agent of the existence of a Trigger
Event. Furthermore, the depository bank at which the Concentration Account
is maintained shall agree that at any time upon receiving notice from Agent
that a Trigger Event exists, it will wire, or otherwise transfer, in
immediately available funds on a daily basis, all funds received or
deposited into the Concentration Account to such bank account of Agent as
Agent may from time to time designate for such purpose ("US Payment
Account"). All payments made to the Canadian Payment Account shall be held
by Agent or Agent's affiliates as cash collateral to secure the Obligations
and shall, at Agent's election, be transferred to the US Payment Account
for application to the Obligations. Borrower agrees that all payments made
to the US Payment Account or other funds received and collected by Agent or
any Lender, whether in respect of the Receivables, as proceeds of Inventory
or other Collateral or otherwise shall be treated as payments to Agent and
Lenders in respect of the Obligations and therefore shall constitute the
property of Agent and Lenders to the extent of the then outstanding
Obligations. Notwithstanding the foregoing, if a Trigger Event does not
exist, Borrower and each Restricted Subsidiary may use the proceeds of
Collateral for their respective working capital and corporate purposes not
otherwise prohibited under the terms of this Agreement, including the
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repayment by any Restricted Subsidiary of its Intercompany Loans. During
the existence of a Trigger Event, all proceeds received in the US Payment
Account that originated from any Restricted Subsidiary shall be deemed (i)
if Agent has made demand of payment under such Restricted Subsidiary's
guaranty or an Event of Default has occurred under Section 10.1(g) or
Section 10.1(h) hereof with respect to such Restricted Subsidiary, to be a
payment on such Restricted Subsidiary's guaranty in favor of Agent or (ii)
in any other case, to be a repayment of such Restricted Subsidiary's
obligations to Borrower (including, without limitation, direct or indirect
obligations to Borrower consisting of repayments on Intercompany Loans)
and, in the case of repayments of Intercompany Loans, the Borrower shall,
and shall cause each applicable Restricted Subsidiary to (if required),
make the appropriate entries with respect to such Restricted Subsidiary's
Intercompany Loan account pursuant to Section 6.1(b) hereof.
(b) During the existence of a Trigger Event, for purposes of
calculating the amount of the Revolving Loans available to Borrower, all
payments received in the US Payment Account will be applied (conditional upon
final collection) to the Revolving Obligations on the same Business Day as
receipt by Agent of immediately available funds in the US Payment Account
provided such payments and notice thereof are received in accordance with
Agent's usual and customary practices as in effect from time to time and
within sufficient time to credit Borrower's loan account on such day, and
if not, then on the next Business Day.
(c) Borrower and all of its shareholders, directors, employees,
agents, Subsidiaries or other Affiliates shall, and Borrower shall cause each
Restricted Subsidiary and its directors, employees, agents, Subsidiaries or
other Affiliates to, acting as trustee for Agent, receive, as the property
of Agent, any monies, checks, notes, drafts or any other payment relating
to and/or proceeds of Accounts of such Persons or other Collateral which
come into their possession or under their control and immediately upon
receipt thereof, shall deposit or cause the same to be deposited in the
applicable Depository Accounts if a Trigger Event exists or remit the same
or cause the same to be remitted, in kind, to Agent. In no event shall the
same be commingled with any such Person's own funds. Borrower agrees to
reimburse Agent on demand for any amounts owed or paid to any bank at which
a Depository Account or Concentration Account is established or any other
bank or person involved in the transfer of funds to or from the Depository
Accounts or Concentration Account arising out of Agent's payments to or
indemnification of such bank or person. The obligation of Borrower to
reimburse Agent for such amounts pursuant to this Section 6.3 shall survive
the termination of this Agreement.
6.4 Payments.
(a) All Obligations shall be payable to the US Payment Account as
provided in Section 6.3 or such other place as Agent may designate from time
to time. Agent shall apply payments received or collected from Borrower or any
Restricted Subsidiary or for the account of Borrower (including the
monetary proceeds of collections or of realization upon any Collateral) to
such of the Obligations, whether or not then due, in the order and manner
set forth in Section 6.11 hereof.
(b) At Agent's option, all interest, fees, costs, expenses and other
charges provided for in this Agreement or the other Financing Agreements
relating to the Obligations may be charged directly to the loan account(s)
of Borrower and shall constitute Revolving Loans. In accordance with
Section 6.10 hereof, Borrower shall make all payments to Agent and Lenders
on the Obligations free and clear of, and without deduction or withholding
for or on account of, any setoff, counterclaim, defense, duties, taxes,
levies, imposts, fees, deductions, withholding, restrictions or conditions
of any kind. If after receipt of any payment of, or proceeds of Collateral
applied to the payment of, any of the Obligations, Agent or any Lender is
required to surrender or return such payment or proceeds to any Person for
any reason, then the Obligations intended to be satisfied by such payment
or proceeds shall be reinstated and continue and this Agreement shall
continue in full force and effect as if such payment or proceeds had not
been received by Agent or such Lender. Borrower shall be liable to pay to
Agent, and does hereby indemnify and hold Agent and Lenders harmless for
the amount of any payments or proceeds surrendered or returned. This
Section 6.4(b) shall remain effective notwithstanding any contrary action
which may be taken by Agent or any Lender in reliance upon such payment or
proceeds. This Section 6.4 shall survive the payment of the Obligations and
the termination or non-renewal of this Agreement.
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6.5 Authorization to Make Loans. Agent and Lenders are authorized to make
the Loans and provide the Letter of Credit Accommodations based upon
telephonic or other instructions received from anyone purporting to be an
officer of Borrower or other authorized person or, at the discretion of
Agent, if such Loans are necessary to satisfy any Obligations. All requests
for Loans or Letter of Credit Accommodations hereunder shall specify the
date on which the requested advance is to be made or Letter of Credit
Accommodations established (which day shall be a Business Day) and the
amount of the requested Loan. Requests received after 12:00 Noon Chicago
time on any day shall be deemed to have been made as of the opening of
business on the immediately following Business Day. All Loans and Letter of
Credit Accommodations under this Agreement shall be conclusively presumed
to have been made to, and at the request of and for the benefit of,
Borrower when deposited to the credit of Borrower or otherwise disbursed or
established in accordance with the instructions of Borrower or in
accordance with the terms and conditions of this Agreement.
6.6 Use of Proceeds. Borrower shall use the initial proceeds of the Loans
provided by Agent to Borrower hereunder only for: (a) payments to each of
the persons listed in the disbursement direction letter furnished by
Borrower to Agent on or about the date hereof and (b) costs, expenses and
fees in connection with the preparation, negotiation, execution and
delivery of this Agreement and the other Financing Agreements. All other
Loans made or Letter of Credit Accommodations provided pursuant to the
provisions hereof shall be used by Borrower, and Borrower shall cause each
Restricted Subsidiary to use proceeds of Intercompany Loans funded by Loans
hereunder, only for general operating, working capital and other proper
corporate purposes of Borrower and such Restricted Subsidiaries not
otherwise prohibited by the terms hereof. Borrower shall not, and shall not
permit any of its Restricted Subsidiaries to, use any proceeds of Loans or
Letter of Credit Accommodation, directly or indirectly, for the purpose of
purchasing or carrying any margin security or for the purposes of reducing
or retiring any indebtedness which was originally incurred to purchase or
carry any margin security or for any other purpose which might cause any of
the Loans to be considered a "purpose credit" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, as
amended.
6.7 Pro Rata Treatment. Except to the extent otherwise provided in this
Agreement: (a) the making and conversion of Loans shall be made among the
Lenders based on their respective Pro Rata Shares as to the Loans and (b)
each payment on account of any Obligations to or for the account of one or
more of Lenders in respect of any Obligations due on a particular day shall
be allocated among the Lenders entitled to such payments based on their
respective Pro Rata Shares and shall be distributed accordingly.
6.8 Sharing of Payments, Etc.
(a) Borrower agrees that, in addition to (and without limitation of)
any right of setoff, banker's lien or counterclaim Agent or any Lender may
otherwise have, each Lender shall be entitled, at its option (but subject,
as among Agent and Lenders, to the provisions of Section 12.3(b) hereof),
to offset balances held by it for the account of Borrower at any of its
offices, in dollars or in any other currency, against any principal of or
interest on any Loans owed to such Lender or any other amount payable to
such Lender hereunder, that is not paid when due (regardless of whether
such balances are then due to Borrower), in which case it shall promptly
notify Borrower and Agent thereof; provided, that, such Lender's failure to
give such notice shall not affect the validity thereof.
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(b) If any Lender (including Agent) shall obtain from Borrower or any
Obligor payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other
Financing Agreements through the exercise of any right of setoff, banker's
lien or counterclaim or similar right or otherwise (other than from Agent
as provided herein), and, as a result of such payment, such Lender shall
have received more than its Pro Rata Share of the principal of the Loans or
more than its share of such other amounts then due hereunder or thereunder
by Borrower or any Obligor to such Lender than the percentage thereof
received by any other Lender, it shall promptly pay to Agent, for the
benefit of the applicable Lenders, the amount of such excess and
simultaneously purchase from such other applicable Lenders a participation
in the Loans or such other amounts, respectively, owing to such other
Lenders (or such interest due thereon, as the case may be) in such amounts,
and make such other adjustments from time to time as shall be equitable, to
the end that all Lenders of the same category of Loans shall share the
benefit of such excess payment (net of any expenses that may be incurred by
such Lender in obtaining or preserving such excess payment) in accordance
with their respective Pro Rata Shares or as otherwise agreed by the
applicable Lenders. To such end all applicable Lenders shall make
appropriate adjustments among themselves (by the resale of participation
sold or otherwise) if such payment is rescinded or must otherwise be
restored.
(c) Borrower agrees that any Lender purchasing a participation (or
direct interest) as provided in this Section may exercise, in a manner
consistent with this Section, all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Loans or other amounts (as the
case may be) owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise
any right of setoff, banker's lien, counterclaims or similar rights or
shall affect the right of any Lender to exercise, and retain the benefits
of exercising, any such right with respect to any other Indebtedness or
obligation of Borrower or any Obligor. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in
lieu of a setoff to which this Section applies, such Lender shall, to the
extent practicable, assign such rights to Agent for the benefit of Lenders
and, in any event, exercise its rights in respect of such secured claim in
a manner consistent with the rights of Lenders entitled under this Section
to share in the benefits of any recovery on such secured claim.
6.9 Settlement Procedures.
(a) In order to administer the Credit Facility in an efficient manner
and to minimize the transfer of funds between Agent and Lenders, Agent may, at
its option, subject to the terms of this Section, make available, on behalf
of Lenders, the full amount of the Revolving Loans requested or charged to
Borrower's loan account(s) or otherwise to be advanced by Lenders pursuant
to the terms hereof, without requirement of prior notice to Lenders of the
proposed Revolving Loans.
(b) With respect to all Loans made by Agent on behalf of Lenders as
provided in this Section, the amount of each Lender's Pro Rata Share of the
outstanding Loans shall be computed weekly, and shall be adjusted upward or
downward on the basis of the amount of the outstanding Loans as of 5:00
p.m. Chicago time on the Business Day immediately preceding the date of
each settlement computation; provided, that, Agent retains the absolute
right at any time or from time to time to make the above described
adjustments at intervals more frequent than weekly, but in no event more
than twice in any week. Agent shall deliver to each of the Lenders after
the end of each week, or at such lesser period or periods as Agent shall
determine, a summary statement of the amount of outstanding Loans for such
period (such week or lesser period or periods being hereinafter referred to
as a "Settlement Period"). If the summary statement is sent by Agent and
received by a Lender prior to 2:00 p.m. Chicago time, then such Lender
shall make the settlement transfer described in this Section by no later
than 2:00 p.m. Chicago time on the next Business Day following the date of
receipt. If, as of the end of any Settlement Period, the amount of a
Lender's Pro Rata Share of the outstanding Loans is more than such Lender's
Pro Rata Share of the outstanding Loans as of the end of the previous
Settlement Period, then such Lender shall forthwith (but in no event later
than the time set forth in the preceding sentence) transfer to Agent by
wire transfer in immediately available funds the amount of the increase.
Alternatively, if the amount of a Lender's Pro Rata Share of the
43
outstanding Loans in any Settlement Period is less than the amount of such
Lender's Pro Rata Share of the outstanding Loans for the previous
Settlement Period, Agent shall forthwith transfer to such Lender by wire
transfer in immediately available funds the amount of the decrease. The
obligation of each of the Lenders to transfer such funds and effect such
settlement shall be irrevocable and unconditional and without recourse to
or warranty by Agent. Agent and each Lender agrees to xxxx its books and
records at the end of each Settlement Period to show at all times the
dollar amount of its Pro Rata Share of the outstanding Loans and Letter of
Credit Accommodations. Each Lender shall only be entitled to receive
interest on its Pro Rata Share of the Loans to the extent such Loans have
been funded by such Lender. Because the Agent on behalf of Lenders may be
advancing and/or may be repaid Loans prior to the time when Lenders will
actually advance and/or be repaid such Loans, interest with respect to
Loans shall be allocated by Agent in accordance with the amount of Loans
actually advanced by and repaid to each Lender and the Agent and shall
accrue from and including the date such Loans are so advanced to but
excluding the date such Loans are either repaid by Borrower or actually
settled with the applicable Lender as described in this Section.
(c) To the extent that Agent has made any such amounts available and
the settlement described above shall not yet have occurred, upon repayment of
any Loans by Borrower, Agent may apply such amounts repaid directly to any
amounts made available by Agent pursuant to this Section. In lieu of weekly
or more frequent settlements, Agent may, at its option, at any time require
each Lender to provide Agent with immediately available funds representing
its Pro Rata Share of each Loan, prior to Agent's disbursement of such Loan
to Borrower. In such event, all Loans under this Agreement shall be made by
the Lenders simultaneously and proportionately to their Pro Rata Shares. No
Lender shall be responsible for any default by any other Lender in the
other Lender's obligation to make a Loan requested hereunder nor shall the
Commitment of any Lender be increased or decreased as a result of the
default by any other Lender in the other Lender's obligation to make a Loan
hereunder.
(d) If Agent is not funding a particular Loan to Borrower pursuant to
this Section above on any day, Agent may assume that each Lender will make
available to Agent such Lender's Pro Rata Share of the Loan requested or
otherwise made on such day and Agent may, in its discretion, but shall not
obligated to, cause a corresponding amount to be made available to Borrower
on such day. If Agent makes such corresponding amount available to Borrower
and such corresponding amount is not in fact made available to Agent by
such Lender, Agent shall be entitled to recover such corresponding amount
on demand from such Lender together with interest thereon for each day from
the date such payment was due until the date such amount is paid to Agent
at the Federal Funds Rate for each day during such period (as published by
the Federal Reserve Bank of New York or at Agent's option based on the
arithmetic mean determined by 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 the three leading brokers of Federal funds
transactions in New York City selected by Agent) and if such amounts are
not paid within three (3) days of Agent's demand, at the highest Interest
Rate provided for in Section 3.1 hereof applicable to Prime Rate Loans.
During the period in which such Lender has not paid such corresponding
amount to Agent, notwithstanding anything to the contrary contained in this
Agreement or any of the other Financing Agreements, the amount so advanced
by Agent to Borrower shall, for all purposes hereof, be a Revolving Loan
made by Agent for its own account. Upon any such failure by a Lender to pay
Agent, Agent shall promptly thereafter notify Borrower of such failure and
Borrower shall pay such corresponding amount to Agent for its own account
within five (5) Business Days of Borrower's receipt of such notice. A
Lender who fails to pay Agent its Pro Rata Share of any Loans made
available by the Agent on such Lender's behalf, or any Lender who fails to
pay any other amount owing by it to Agent, is a "Defaulting Lender". Agent
shall not be obligated to transfer to a Defaulting Lender any payments
received by 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 Agent. Agent may hold and, in its discretion, relend to Borrower 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
44
with respect to this Agreement and the other Financing Agreements and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to
be a "Lender" and such Lender's Commitments shall be deemed to be zero (0).
This Section shall remain effective with respect to a Defaulting Lender
until such default is cured. The operation of this Section shall not be
construed to increase or otherwise affect the Commitments of any Lender, or
relieve or excuse the performance by Borrower or any Obligor of their
duties and obligations hereunder.
(e) Nothing in this Section or elsewhere in this Agreement or the
other Financing Agreements shall be deemed to require Agent to advance funds
on behalf of any Lender or to relieve any Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Borrower
may have against any Lender as a result of any default by any Lender
hereunder in fulfilling its Commitments.
6.10 Taxes.
(a) Any and all payments by Borrower and each Obligor to Agent or any
Lender under this Agreement and any of the other Financing Agreements shall
be made free and clear of, and without deduction or withholding for any
Taxes, except to the extent that it is required by law to deduct or
withhold any Taxes or Other Taxes (in which case Section 6.10(c) below
shall apply). In addition, Borrower shall pay all Other Taxes (or Agent
may, at its option, pay such Other Taxes and charge the loan account of the
Borrower for such amounts so paid).
(b) Borrower shall, and shall cause each Restricted Subsidiary to,
indemnify and hold harmless Agent and Lenders for the full amount of Taxes
and Other Taxes paid by Agent or any Lender (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under any of the
Financing Agreements, but not including Other Taxes that arise as a result
of Agent or any Lender's arrangements with the applicable taxing
jurisdiction, if any, and not as a result of this Agreement) and any
liability (including penalties, interest and expenses (including reasonable
legal fees and expenses) other than those resulting solely from a failure
by Agent or any Lender to pay any Taxes or Other Taxes which it is required
to pay and for which it received an indemnity payment) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted by the relevant Governmental Authority.
Payment under this indemnification shall be made within ten (10) days after
the date Agent or any Lender makes written demand therefor. If such Taxes
or Other Taxes were not correctly or legally asserted, Agent or such Lender
shall, upon Borrower's request and at Borrower's expense, provide such
documents to Borrower as Borrower may reasonably request, to enable
Borrower to contest such Taxes or Other Taxes pursuant to appropriate
proceedings then available to Borrower (so long as providing such documents
shall not, in the good faith determination of Agent, have a reasonable
likelihood of resulting in any liability of Agent or any Lender).
(c) If Borrower or any Obligor shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to Agent or any Lender, 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 Agent on behalf of such Lender) receives an amount equal to the
sum it would have received had no such deductions or withholdings been
made;
(ii) Borrower shall, or shall cause the applicable Obligor to,
make such deductions and withholdings;
(iii) Borrower shall, or shall cause the applicable Obligor to,
pay the full amount deducted or withheld to the relevant taxing authority or
other authority in accordance with applicable law; and
(iv) Borrower shall, or shall cause the applicable Obligor to,
also pay to Agent or any Lender, at the time interest is paid, all additional
amounts which Agent or any Lender specifies as necessary in such Lender's good
faith determination to preserve the after-tax yield such Lender would have
received if such Taxes or Other Taxes had not been imposed.
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(d) Within thirty (30) days after the date of any payment by Borrower
or any Obligor of Taxes or Other Taxes referenced in Section 6.10(b) above,
Borrower shall furnish to Agent the original or a certified copy of a
receipt evidencing payment thereof, or other evidence of payment
satisfactory to Agent. To the extent that any Lender obtains a refund of
any Taxes or Other Taxes after any sum payable hereunder or under any
Financing Agreement has been increased and paid by Borrower or any Obligor
(to the extent such refund has not previously been reimbursed) pursuant to
this Section 6.10 to take such Taxes or Other Taxes into account, such
Lender shall return such refund to the applicable Person.
(e) Each Lender that is a "foreign corporation, partnership or trust"
within the meaning of the Code (a "Foreign Lender") shall deliver to the
Agent, prior to receipt of any payment subject to withholding under the
Code (or after accepting an assignment of an interest herein), two duly
signed completed copies of either IRS Form W-8BEN or any successor thereto
(relating to such Person and entitling it to an exemption from, or
reduction of, withholding tax on all payments to be made to such Person by
the Borrower pursuant to this Agreement) or IRS Form W-8ECI or any
successor thereto (relating to all payments to be made to such Person by
the Borrower pursuant to this Agreement) or such other evidence
satisfactory to the Borrower and the Agent that such Person is entitled to
an exemption from, or reduction of, U.S. withholding tax. Thereafter and
from time to time, each such Person shall (a) promptly submit to the Agent
such additional duly completed and signed copies of one of such forms (or
such successor forms as shall be adopted from time to time by the relevant
United States taxing authorities) as may then be available under then
current United States laws and regulations to avoid, or such evidence as if
satisfactory to the Borrower and the Agent of any available exemption from
or reduction of, United States withholding taxes in respect of all payments
to be made to such Person by the Borrower pursuant to this Agreement, (b)
promptly notify the Agent of any change in circumstances which would modify
or render invalid any claimed exemption or reduction, and (c) take such
steps as shall not be materially disadvantageous to it, in the reasonable
judgment of such Lender, and as may be reasonably necessary (including the
re-designation of its lending office) to avoid any requirement of
applicable Laws that the Borrower make any deduction or withholding for
taxes from amounts payable to such Person. If such Person fails to deliver
the above forms or other documentation, then the Agent may withhold from
any interest payment to such Person an amount equivalent to the applicable
withholding tax imposed by Sections 1441 and 1442 of the Code, without
reduction. If any Governmental Authority asserts that the Agent did not
properly withhold any tax or other amount from payments made in respect of
such Person, such Person shall indemnify the Agent therefor, including all
penalties and interest, any taxes imposed by any jurisdiction on the
amounts payable to the Agent under this Section 6.10(e), and costs and
expenses (including legal expenses) of the Agent. The obligation of the
Lenders under this Section shall survive the payment of all Obligations and
the resignation or replacement of the Agent.
6.11 Application of Payments. Upon receipt by Agent of cash proceeds of
Collateral from the US Payment Account or from any sale, lease, foreclosure
or other disposition of the Collateral or otherwise, Agent shall apply such
proceeds as follows: first, to all costs and expenses of Agent, any Lender
or their representatives in realizing on such proceeds, second, to any
reimbursable expenses and Special Agent Advances which are allocable, in
Agent's determination, to the administration and preservation of such
Collateral, third, to accrued and unpaid fees and unreimbursed costs,
expenses and indemnity obligations owing hereunder, fourth, to accrued and
unpaid interest on the Revolving Loans (unless Agent determines that such
application may result in the payment of withholding taxes in which case
Agent may elect to apply such proceeds to accrued and unpaid interest after
all other Obligations have been paid in full), fifth, to principal on the
Revolving Loans until paid in full, sixth, to provide cash collateral for
Letter of Credit Accommodations and seventh, to all other Obligations;
provided that Obligations under Hedging Agreements shall only be paid after
all other Obligations have been paid in full. Each payment on any of the
Loans to or for the account of one or more Lender's entitled to such
payments pursuant to the preceding sentence shall be allocated among such
Lenders based on their respective Pro Rata Shares of such Loans. Borrower
shall remain liable to Agent and Lenders for the payment of any deficiency
with interest at the highest rate provided for herein and all costs and
expenses of collection or enforcement, including legal and attorneys' fees
and expenses.
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SECTION 7. COLLATERAL REPORTING AND COVENANTS
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7.1 Collateral Reporting.
(a) Borrower shall provide Agent with the following documents in a
form reasonably satisfactory to Agent:
(i) as soon as possible after the end of each week (but in any
event within three (3) Business Days after the end thereof), on a weekly
basis or more frequently as Agent may in good faith request, a Borrowing
Base Certificate setting forth the calculation of the Borrowing Base as of
the last Business Day of the immediately preceding week as to the Eligible
Accounts, Eligible Inventory and Intercompany Loan Balances for each
Operating Company, duly completed and executed by the chief financial
officer or other appropriate financial officer of Borrower reasonably
acceptable to Agent including schedules of Accounts, sales made, credits
issued and collections received for each day of such period, provided,
that, so long as no Trigger event has occurred, Borrower shall not be
required to deliver such Borrowing Base Certificate except after the end of
each month (no later than the fifteenth (15th) day of each month for the
month just ended).
(ii) as soon as possible after the end of each month (but in any
event no later than the fifteenth (15th) day of each month for the month just
ended), on a monthly basis or more frequently as Agent may reasonably
request, (A) perpetual inventory reports for each Operating Company, (B)
inventory reports by location and category for each Operating Company (and
including the amounts of Inventory and the value thereof at any leased
locations and at premises of warehouses, processors or other third
parties), (C) agings of accounts receivable for each Operating Company and
(D) summaries of accounts payable information for each Operating Company in
accordance with its reporting capabilities as existing on the date hereof
and as previously disclosed to Agent;
(iii) upon Agent's reasonable request, (A) copies of customer
statements and credit memos, remittance advices and reports, and copies of
deposit slips and bank statements, (B) copies of shipping and delivery
documents, (C) copies of purchase orders, invoices and delivery documents for
Inventory and Equipment acquired by any Operating Company and (D) copies of
monthly journal registers showing all entries or other transactions with
respect to Intercompany Loans, as described in Section 6.1(b) hereof; and
(iv) such other reports and information as to the Collateral or
accounts payable as Agent shall request from time to time.
(b) Nothing contained in any Borrowing Base Certificate shall be
deemed to limit, impair or otherwise affect the rights of Agent contained
herein and in the event of any conflict or inconsistency between the
calculation of the Borrowing Base as set forth in any Borrowing Base
Certificate and as determined by Agent in good faith, the determination of
Agent shall govern and be conclusive and binding upon Borrower. Without
limiting the foregoing, Borrower shall furnish to Agent any information
which Agent may reasonably request regarding the determination and
calculation of any of the amounts set forth in any Borrowing Base
Certificate.
(c) If any of Borrower's or any Operating Company's records or
reports of the Collateral are prepared or maintained by an accounting
service, contractor, shipper or other agent, Borrower hereby irrevocably
authorizes, and shall cause such Operating Company to authorize, such
service, contractor, shipper or agent to deliver such records, reports, and
related documents to Agent and to follow Agent's instructions with respect
to further services at any time that an Event of Default exists or has
occurred and is continuing.
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7.2 Accounts Covenants.
(a) Borrower shall, and shall cause each Restricted Subsidiary to,
notify Agent promptly of: (i) any material delay in such Person's performance
of any of its material obligations to any account debtor or the assertion of
any material claims, offsets, defenses or counterclaims by any account
debtor, or any material disputes with account debtors, or any settlement,
adjustment or compromise thereof, (ii) all material adverse information
known to such Person relating to the financial condition of any account
debtor and (iii) any event or circumstance which, to such Person's
knowledge, would cause Agent to consider any then existing Accounts as no
longer constituting Eligible Accounts. No credit, discount, allowance or
extension or agreement for any of the foregoing shall be granted to any
account debtor without Agent's consent, except in the ordinary course of
Borrower's or a Restricted Subsidiary's business in accordance with
historical practices and policies. So long as no Event of Default exists or
has occurred and is continuing, Borrower may, and may cause each Restricted
Subsidiary to, settle, adjust or compromise any claim, offset, counterclaim
or dispute with any account debtor. At any time that an Event of Default
exists or has occurred and is continuing, Agent shall, at its option but
upon notice to Borrower, have the exclusive right to settle, adjust or
compromise any claim, offset, counterclaim or dispute with account debtors
or grant any credits, discounts or allowances.
(b) Without limiting the obligation of Borrower to deliver any other
information to Agent, Borrower shall, and shall cause each Restricted
Subsidiary to, promptly report to Agent any return of Inventory by any one
account debtor if the Inventory so returned in such case has a value in
excess of $500,000. At any time that such Inventory is returned, reclaimed
or repossessed, the Account (or portion thereof) which arose from the sale
of such returned, reclaimed or repossessed Inventory shall not be deemed an
Eligible Account. In the event any account debtor returns Inventory of
Borrower or any Restricted Subsidiary when an Event of Default exists or
has occurred and is continuing, Borrower shall, and shall cause each
Restricted Subsidiary to, upon Agent's request, (i) hold the returned
Inventory in trust for Agent, (ii) segregate all returned Inventory from
all of its other property, (iii) dispose of the returned Inventory solely
according to Agent's instructions, and (iv) not issue any credits,
discounts or allowances with respect thereto without Agent's prior written
consent.
(c) With respect to each Account of Borrower and each Restricted
Subsidiary: (i) the amounts shown on any invoice delivered to Agent or
schedule thereof delivered to Agent shall be true and complete, (ii) no
payments shall be made thereon except payments immediately delivered to the
applicable Depository Account if a Trigger Event exists, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing
shall be granted to any account debtor except as reported to Agent in
accordance with this Agreement and except for credits, discounts,
allowances or extensions made or given in the ordinary course of Borrower's
or the applicable Restricted Subsidiary's business in accordance with
historical practices and policies, (iv) there shall be no setoffs,
deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Agent in accordance
with the terms of this Agreement and the other Financing Agreements, (v)
none of the transactions giving rise thereto will violate any applicable
foreign, Federal, state, provincial or local laws or regulations, all
documentation relating thereto will be legally sufficient under such laws
and regulations and all such documentation will be legally enforceable in
accordance with its terms.
(d) Agent shall have the right at any time or times, in Agent's name
or in the name of a nominee of Agent, to verify the validity, amount or any
other matter relating to any Receivables of Borrower or any Restricted
Subsidiary or other Collateral, by mail, telephone, facsimile transmission or
otherwise.
(e) Borrower shall, and shall cause each Restricted Subsidiary to,
deliver or cause to be delivered to Agent, with appropriate endorsement and
assignment, all chattel paper and instruments which Borrower or such
Restricted Subsidiary now owns or may at any time acquire immediately upon
Borrower's or such Restricted Subsidiary's receipt thereof, except as Agent
may otherwise agree.
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(f) Agent may, at any time or times that an Event of Default exists
or has occurred and is continuing, (i) notify any or all account debtors
and other obligors in respect thereof that the Receivables of Borrower or
any Restricted Subsidiary have been assigned to Agent and that Agent has a
security interest therein and Agent may direct any or all accounts debtors
and other obligors to make payment of such Receivables directly to Agent,
(ii) extend the time of payment of, compromise, settle or adjust for cash,
credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Receivables of Borrower or any Restricted
Subsidiary or other obligations included in the Collateral and thereby
discharge or release the account debtor or any other party or parties in
any way liable for payment thereof without affecting any of the
Obligations, (iii) demand, collect or enforce payment of any Receivables of
Borrower or any Restricted Subsidiary or such other obligations, but
without any duty to do so, and Agent and Lenders shall not be liable for
its or their failure to collect or enforce the payment thereof nor for the
negligence of its or their agents or attorneys with respect thereto and
(iv) take whatever other action Agent may deem necessary or desirable for
the protection of its interests. At any time that an Event of Default
exists or has occurred and is continuing, at Agent's request, all invoices
and statements sent to any account debtor shall state that the Accounts of
Borrower and each Restricted Subsidiary and such other obligations have
been assigned to Agent and are payable directly and only to Agent and
Borrower shall, and shall cause each Restricted Subsidiary to, deliver to
Agent such originals of documents evidencing the sale and delivery of goods
or the performance of services giving rise to any Accounts of Borrower and
each Restricted Subsidiary as Agent may require.
7.3 Inventory Covenants. With respect to the Inventory of Borrower and
each Restricted Subsidiary: (a) Borrower shall, and shall cause each
Restricted Subsidiary to, at all times maintain inventory records
reasonably satisfactory to Agent, keeping correct and accurate records
itemizing and describing the kind, type, quality and quantity of such
Inventory, Borrower's and each Restricted Subsidiary's cost therefor and
daily withdrawals therefrom and additions thereto; (b) Borrower shall, and
shall cause each Restricted Subsidiary to, conduct a physical count of
their respective Inventory at least once each year but at any time or times
as Agent may request on or after an Event of Default, and promptly
following such physical inventory shall supply Agent with a report in the
form and with such specificity as may be reasonably satisfactory to Agent
concerning such physical count; (c) Borrower shall not, and shall not
permit any Restricted Subsidiary to, remove any Inventory from the
locations set forth in the Information Certificate or permitted herein,
without the prior written consent of Agent, except for sales of Inventory
in the ordinary course of their business and except to move Inventory
directly from one location set forth or permitted herein to another such
location (so long as financing statements satisfactory to Agent have been
previously recorded in the appropriate governmental offices of the
jurisdiction of such location if required to perfect or maintain the
perfection of Agent's security interests therein); (d) upon Agent's
request, Borrower shall, and shall cause each Restricted Subsidiary to, at
such Person's expense, no more than once in any twelve (12) month period,
but at any time or times as Agent may request on or after an Event of
Default, deliver or cause to be delivered to Agent written appraisals as to
the Inventory of such Person in form, scope and methodology reasonably
acceptable to Agent and by an appraiser reasonably acceptable to Agent,
addressed to Agent and Lenders and upon which Agent and Lenders are
expressly permitted to rely; (e) Borrower shall, and shall cause each
Restricted Subsidiary to, produce, use, store and maintain the Inventory
with all reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with applicable laws
(including the requirements of the Federal Fair Labor Standards Act of
1938, as amended and all rules, regulations and orders related thereto);
(f) Borrower and each Restricted Subsidiary assumes all responsibility and
liability arising from or relating to the production, use, sale or other
disposition of their Inventory (other than any liability arising from the
gross negligence or willful misconduct of Agent or any Lender); (g)
Borrower shall not, and shall not permit any Restricted Subsidiary to, sell
Inventory to any customer on approval, or any other basis which entitles
the customer to return or may obligate Borrower or any Restricted
Subsidiary to repurchase such Inventory except in accordance with
historical practices and policies; (h) Borrower shall, and shall cause each
Restricted Subsidiary to, keep its Inventory in good and marketable
condition; and (i) Borrower shall not, and shall not permit any Restricted
Subsidiary to, without prior written notice to Agent, acquire or accept any
Inventory on consignment or approval.
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7.4 Equipment and Real Property Covenants. With respect to the Equipment
and Real Property Related Interests of Borrower and each Restricted
Subsidiary: (a) upon Agent's request at any time (but not, in the absence
of an existing Event of Default, more than once a year, excluding any
appraisals done prior to the date hereof), Borrower shall, and shall cause
each Restricted Subsidiary to, at its expense, deliver or cause to be
delivered to Agent written reports or appraisals of such Person's Equipment
and/or Real Property Related Interests, in form, scope and methodology
acceptable to Agent and by an appraiser acceptable to Agent; (b) Borrower
shall, and shall cause each Restricted Subsidiary to, keep the Equipment in
good order, repair, running and marketable condition (ordinary wear and
tear excepted); (c) Borrower shall, and shall cause each Restricted
Subsidiary to, use the Equipment and Real Property Related Interests with
all reasonable care and caution and in accordance with applicable standards
of any insurance and in material conformity with all applicable laws; (d)
Borrower shall not, and shall not permit any Restricted Subsidiary to,
remove any Equipment of such Person from the locations set forth or
permitted herein, except to the extent necessary to have any such Equipment
replaced, repaired or maintained in the ordinary course of its business or
to move Equipment directly from one location set forth or permitted herein
to another such location and except for the movement of motor vehicles used
by or for the benefit of Borrower or such Restricted Subsidiary in the
ordinary course of business (in each case so long as financing statements
satisfactory to Agent have been previously recorded in the appropriate
governmental offices of the jurisdiction of such location if required to
perfect or maintain the perfection of the Agent's security interest
therein); (e) the Equipment of Borrower and each Restricted Subsidiary is
now and shall remain personal property of such Person and Borrower shall
not, and shall not permit any Restricted Subsidiary to, permit any of their
respective Equipment to be or become a part of or affixed to real property;
and (f) Borrower and each Restricted Subsidiary assumes all responsibility
and liability arising from the use of their Equipment and Real Property
Related Interests.
7.5 Power of Attorney. Borrower hereby irrevocably designates and appoints,
and shall cause each Restricted Subsidiary to irrevocably designate and
appoint, Agent (and all persons designated by Agent) as Borrower's and such
Restricted Subsidiary's true and lawful attorney-in-fact, and Borrower
authorizes, and shall cause each Restricted Subsidiary to authorize, Agent,
in Borrower's or any Restricted Subsidiary's or Agent's name, to: (a) at
any time an Event of Default exists or has occurred and is continuing (i)
demand payment on Receivables or other Collateral, (ii) enforce payment of
Receivables by legal proceedings or otherwise, (iii) exercise all of
Borrower's or any Restricted Subsidiary's rights and remedies to collect
any Receivable or other Collateral, (iv) sell or assign any Receivable upon
such terms, for such amount and at such time or times as the Agent deems
advisable, (v) settle, adjust, compromise, extend or renew an Account, (vi)
discharge and release any Receivable, (vii) prepare, file and sign
Borrower's or any Restricted Subsidiary's name on any proof of claim in
bankruptcy or other similar document against an account debtor or other
obligor in respect of any Receivables or other Collateral, (viii) notify
the post office authorities to change the address for delivery of
remittances from account debtors or other obligors in respect of
Receivables or other proceeds of Collateral to an address designated by
Agent, and open and dispose of all mail addressed to Borrower or any
Restricted Subsidiary and handle and store all mail relating to the
Collateral; and (ix) do all acts and things which are necessary, in Agent's
good faith determination, to fulfill Borrower's or any Restricted
Subsidiary's obligations under this Agreement and the other Financing
Agreements and (b) at any time during the existence of a Trigger Event: (i)
take control in any manner of any item of payment in respect of Receivables
or constituting Collateral or otherwise received in or for deposit in the
Concentration Account or otherwise received by Agent or any Lender, (ii)
have access to any lockbox or postal box into which remittances from
account debtors or other obligors in respect of Receivables or other
proceeds of Collateral are sent or received, (iii) endorse Borrower's or
any Restricted Subsidiary's name upon any items of payment in respect of
Receivables or constituting Collateral or otherwise received by Agent and
any Lender and deposit the same in Agent's account for application to the
Obligations, (iv) endorse Borrower's or any Restricted Subsidiary's name
upon any chattel paper, document, instrument, invoice, or similar document
or agreement relating to any Receivable or any goods pertaining thereto or
any other Collateral, including any warehouse or other receipts, or bills
of lading and other negotiable or non-negotiable documents, (v) clear
Inventory the purchase of which was financed with Letter of Credit
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Accommodations through U.S. Customs or Canadian Customs in Borrower's or
any Restricted Subsidiary's name, Agent's name or the name of Agent's
designee, and to sign and deliver to customs officials powers of attorney
in Borrower's or any Restricted Subsidiary's name for such purpose, and to
complete in Borrower's or any Restricted Subsidiary's or Agent's name, any
order, sale or transaction, obtain the necessary documents in connection
therewith and collect the proceeds thereof, (vi) sign Borrower's or any
Restricted Subsidiary's name on any verification of Receivables and notices
thereof to account debtors or other obligors in respect thereof and (vii)
execute in Borrower's or any Restricted Subsidiary's name and file any UCC
or PPSA financing statements or amendments thereto. Borrower hereby
releases, and shall cause each Restricted Subsidiary to release, Agent and
Lenders and their respective officers, employees and designees from any
liabilities arising from any act or acts under this power of attorney and
in furtherance thereof, whether of omission or commission, except as a
result of Agent's or any Lender's own gross negligence or willful
misconduct as determined pursuant to a final non-appealable order of a
court of competent jurisdiction.
7.6 Right to Cure. Agent may, at its option, upon notice to Borrower, (a)
cure any default by Borrower or any Restricted Subsidiary under any
agreement with a third party to the extent Agent believes in its reasonable
credit judgment that such cure will preserve and/or protect the value of
any material portion of the Collateral or Agent's rights thereto, (b) pay
or bond on appeal any judgment entered against Borrower or any Restricted
Subsidiary, (c) discharge taxes, liens, security interests or other
encumbrances at any time levied on or existing with respect to the
Collateral and (d) pay any amount, incur any expense or perform any act
which, in Agent's judgment, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and the rights of Agent and
Lenders with respect thereto. Agent may add any amounts so expended to the
Obligations and charge Borrower's account therefor, such amounts to be
repayable by Borrower on demand. Agent and Lenders shall be under no
obligation to effect such cure, payment or bonding and shall not, by doing
so, be deemed to have assumed any obligation or liability of Borrower or
any Obligor. Any payment made or other action taken by Agent or any Lender
under this Section shall be without prejudice to any right to assert an
Event of Default hereunder and to proceed accordingly.
7.7 Access to Premises. From time to time as requested by Agent (but not,
in the absence of an existing Trigger Event, more than three times a year
at the election of Agent, excluding any examinations done prior to the date
hereof), at the cost and expense of Borrower, (a) Agent or its designee
shall have complete access to all of Borrower's and each Restricted
Subsidiary's premises during normal business hours and after notice to
Borrower, or at any time and without notice to Borrower if an Event of
Default exists or has occurred and is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of Borrower's and
each Restricted Subsidiary's books and records, including the Records and
(b) Borrower shall, and shall cause each Restricted Subsidiary to, promptly
furnish to Agent such copies of such books and records or extracts
therefrom as Agent may reasonably request, and (c) Agent or any Lender or
Agent's designee may use during normal business hours such of Borrower's
and each Restricted Subsidiary's personnel, equipment, supplies and
premises as may be reasonably necessary for the foregoing and if an Event
of Default exists or has occurred and is continuing for the collection of
Receivables and realization of other Collateral. Notwithstanding the
foregoing, neither Borrower nor any Restricted Subsidiary shall be required
to permit any Person to inspect any such records which Borrower or any
Restricted Subsidiary is required by law or any written agreement (other
than any Affiliate of Borrower unless any such records were provided by any
third party to any such Affiliate on a confidential basis) to keep
confidential unless such law or written agreement permits disclosure upon
such Person's acknowledgment and/or agreement to keep such records
confidential.
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SECTION 8. REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower hereby represents and warrants to Agent and Lenders the
following (which shall survive the execution and delivery of this
Agreement), the truth and accuracy of which are a continuing condition of
the making of Loans and providing Letter of Credit Accommodations:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Each Credit
Party is a corporation duly organized and in good standing under the laws
of its jurisdiction of incorporation and is duly qualified or registered as
a foreign or extra-provincial corporation and in good standing in all
states, provinces or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such
qualification necessary and where the failure to so qualify has or could
reasonably be expected to have a Material Adverse Effect. The execution,
delivery and performance of this Agreement, the other Financing Agreements
and the transactions contemplated hereunder and thereunder to which each
Credit Party is a party are all within each Credit Party's corporate
powers, have been duly authorized and do not violate or breach any law or
the terms of any Credit Party's certificate of incorporation, by-laws, or
other organizational documentation, or any indenture, agreement or
undertaking to which any Credit Party is a party or by which any Credit
Party or its property are bound (other than indentures, agreements or other
undertakings the violation of which will not, individually or in the
aggregate, result in a Material Adverse Effect. This Agreement and the
other Financing Agreements constitute legal, valid and binding obligations
of each Credit Party enforceable in accordance with their respective terms
except as such enforceability may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, or similar law affecting creditors'
rights generally and by general principles of equity regardless of whether
considered a proceeding in equity or at law. Borrower has no direct or
indirect Subsidiaries on the date hereof except as set forth on the
Information Certificate. Each Operating Company and Intermediate Holding
Company is a Subsidiary of the Borrower.
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to any Credit Party which have been or may hereafter be
delivered by Borrower to Agent and Lenders have been prepared in accordance
with GAAP and fairly present the financial condition and the results of
operation of such Credit Party as at the dates and for the periods set
forth therein. There has been no act, condition or event which has had or
is reasonably likely to have a Material Adverse Effect since the date of
the most recent audited financial statements of the Credit Parties
furnished by Borrower to Agent prior to the date of this Agreement.
8.3 Chief Executive Office; Collateral Locations. The chief executive
office of Borrower and each Restricted Subsidiary and each such Person's
Records concerning Accounts are located only at the chief executive office
address for each such Person as set forth on the Information Certificate
and each such Person's other places of business and the only other
locations of Collateral, if any, are the addresses as identified on the
Information Certificate, subject to the right of each such Person to
establish new locations in accordance with Section 9.2 below. The
Information Certificate correctly identifies any of such locations which
are not owned by Borrower and each Restricted Subsidiary and sets forth the
owners and/or operators thereof.
8.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Agent under this Agreement and the other Financing
Agreements constitute valid and perfected first priority liens and security
interests in and upon the Collateral subject only to those liens which are
specifically designated under Sections 9.8(b), (c), (d), (e), (f), (i),
(j), (k) or (l) hereof or which are specifically designated on Schedule 9.8
hereto as being senior in priority to the liens of Agent. Borrower and each
Restricted Subsidiary has good and valid title to all of its properties and
assets subject to no liens, mortgages, pledges, security interests,
encumbrances or charges of any kind, except those granted to Agent, junior
liens securing Intercompany Loans and such others as are permitted under
Section 9.8 hereof.
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8.5 Tax Returns. Each Credit Party has filed, or caused to be filed, in a
timely manner all federal tax returns and all other material tax returns,
reports and declarations which are required to be filed by it (without
requests for extension except as previously disclosed in writing to Agent).
All information in such tax returns, reports and declarations is complete
and accurate in all material respects. Each Credit Party has paid or caused
to be paid all taxes due and payable or claimed due and payable in any
assessment received by it, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Credit Party and with respect to which adequate reserves
have been set aside on its books. Adequate provision has been made for the
payment of all accrued and unpaid Federal, State, county, local, foreign
and other taxes whether or not yet due and payable and whether or not
disputed. The Tax Sharing Agreement is in full force and effect and each
party thereto is in compliance with the terms thereof and no default exists
for non-payment of due and owing tax liabilities thereunder.
8.6 Litigation. Except as set forth on Schedule 8.6 hereto, (i) there is
no investigation by any Governmental Authority pending, or to the best of
Borrower's knowledge threatened, against or affecting any Credit Party or
their assets or business and (ii) there is no action, suit, proceeding or
claim by any Person pending, or to the best of Borrower's knowledge
threatened, against any Credit Party or their assets or goodwill, or
against or affecting any transactions contemplated by this Agreement,
unless in each case the likelihood of an unfavorable outcome is remote and,
if adversely determined, could not reasonably be expected to have a
Material Adverse Effect.
8.7 Compliance with Other Agreements and Applicable Laws.
(a) No Credit Party is in default in any respect under, or in
violation in any respect of the terms of, any indenture, agreement or other
undertaking to which it is a party or by which any of its properties or
assets are or may be bound where such default has had or could reasonably
be expected to have a Material Adverse Effect. Each Credit Party is in
compliance with the requirements of all applicable laws, rules, regulations
and orders of any Governmental Authority relating to its business,
including, without limitation, those set forth in or promulgated pursuant
to the Occupational Safety and Health Act of 1970, as amended, the Fair
Labor Standards Act of 1938, as amended, ERISA, the Code, as amended, and
the rules and regulations thereunder, and all Environmental Laws where the
failure to comply in each case has or could reasonably be expected to have
Material Adverse Effect.
(b) Borrower and each Restricted Subsidiary has obtained all permits,
licenses, approvals, consents, certificates, orders or authorizations of
any Governmental Authority required for the lawful conduct of its business
(the "Permits") where the failure to obtain any such Permit has or could
reasonably be expected to have a Material Adverse Effect. All of the
Permits are valid and subsisting and in full force and effect. There are no
actions, claims or proceedings pending or to the best of Borrower's
knowledge, threatened that seek the revocation, cancellation, suspension or
modification of any of the Permits so long as the likelihood of an
unfavorable outcome is remote and, if adversely determined, could
reasonably be expected to have a Material Adverse Effect.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 hereto, no Credit Party has
generated, used, stored, treated, transported, manufactured, handled,
produced or disposed of any Hazardous Materials, on or off its premises
(whether or not owned by it) in any manner which at any time violates any
applicable Environmental Law or Permit and the operations of each Credit
Party complies in all material respects with all Environmental Laws and all
Permits, except in each case where such activities or such failure to
comply could not reasonably be expected to result in a Material Adverse
Effect.
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(b) Except as set forth on Schedule 8.8 hereto, there has been no
investigation by any Governmental Authority or any proceeding, complaint,
order, directive, claim, citation or notice by any Governmental Authority
or any other person nor is any pending or to the best of Borrower's
knowledge threatened, with respect to any non-compliance with or violation
of the requirements of any Environmental Law by any Credit Party or the
release, spill or discharge, threatened or actual, of any Hazardous
Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or
any other environmental, health or safety matter, which could reasonably be
expected to result in a Material Adverse Effect.
(c) Except as set forth on Schedule 8.8, no Credit Party has any
liability (contingent or otherwise) in connection with a release, spill or
discharge, threatened or actual, of any Hazardous Materials or the generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials, except where such liability could not
reasonably be expected to result in a Material Adverse Effect.
(d) Each Credit Party has all Permits required to be obtained or filed in
connection with the operations of such Person under any Environmental Law
where the failure to obtain such Permits has or could reasonably be
expected to have a Material Adverse Effect and all of such licenses,
certificates, approvals or similar authorizations and other Permits are
valid and in full force and effect.
8.9 Employee Benefits.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code, other Federal or State law and their
foreign equivalents to the extent applicable. Each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service or will submit a
request for a favorable determination letter within the applicable remedial
amendment period and to the best of Borrower's knowledge, nothing has
occurred which would cause any Plan not to be so qualified. No contribution
failure in excess of $500,000 has occurred with respect to any Plan. 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 of Borrower's knowledge,
threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which could reasonably be expected to
result in a liability to a Credit Party in excess of $1,000,000. There has
been no prohibited transaction or violation of the fiduciary responsibility
rules with respect to any Plan which would result in a liability to any
Credit Party in excess of $1,000,000.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur and no other event or condition with respect to a Plan or any Plan
subject to Title IV of ERISA maintained, or contributed to, by any ERISA
Affiliate that could reasonably be expected to result in liability of any
Credit Party in an amount in excess of $500,000 has occurred or is
reasonably expected to occur; (ii) the current value of each Plan's assets
(determined in accordance with the assumptions used for funding such Plan
pursuant to Section 412 of the Code) are as of the date of the most recent
financial statements reflecting such amounts, not less than ninety percent
(90%) of such Plan's liabilities under Section 412(l)(7) of the Code; (iii)
each Credit Party and their ERISA Affiliates have not incurred and do not
reasonably expect to incur, any liability under Title IV of ERISA with
respect to any Plan (other than premiums due and not delinquent under
Section 4007 of ERISA) in excess of $500,000; (iv) each Credit Party and
their ERISA Affiliates have not incurred and do not reasonably expect to
incur, any liability in excess of $1,000,000 (and no event has occurred
which, with the giving of notice under Section 4219 of ERISA, would result
in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) each Credit Party and their ERISA Affiliates
have not engaged in a transaction that would be subject to Section 4069 or
4212(c) of ERISA which individually or in the aggregate has or could
reasonably be expected to have a Material Adverse Effect.
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(d) As to any Canadian Pension Plan of a Credit Party: (i) such
Canadian Pension Plan is duly registered under all applicable provincial
pension benefits legislation; (ii) all obligations of such Credit Party
(including fiduciary, funding, investment and administration obligations)
required to be performed in connection with such Canadian Pension Plan or
the funding agreements therefor have been performed in a timely fashion and
there are no outstanding disputes concerning the assets held pursuant to
any such funding agreement; (iii) all contributions or premiums required to
be made by such Credit Party to such Canadian Pension Plan have been made
in a timely fashion in accordance with the terms of such Canadian Pension
Plan and applicable laws and regulations; (iv) all employee contributions
to such Canadian Pension Plan required to be made by way of authorized
payroll deduction have been properly withheld by such Credit Party and
fully paid into such Canadian Pension Plan in a timely fashion; (v) all
reports and disclosures relating to such Canadian Pension Plan required by
any applicable laws or regulations have been filed or distributed in a
timely fashion; (vi) there have been no improper withdrawals, or
applications of, the assets of any of such Canadian Pension Plan; (vii) no
amount is owing by any of such Canadian Pension Plan under the Income Tax
Act (Canada) or any provincial taxation statute; (viii) such Canadian
Pension Plan is fully funded both on an ongoing basis and on a solvency
basis (using actuarial assumptions and methods which are consistent with
the valuations last filed with the applicable governmental authorities and
which are consistent with generally accepted actuarial principles); and
(ix) no Credit Party, after diligent enquiry, has any knowledge, or any
grounds for believing, that any of the Canadian Pension Plans is the
subject of an investigation, any other proceeding, an action or a claim and
there exists no state of facts which after notice or lapse of time or both
could reasonably be expected to give rise to any such proceeding, action or
claim.
8.10 Bank Accounts. All of the deposit accounts, investment accounts
or other accounts in the name of or used by Borrower or any Restricted
Subsidiary maintained at any bank or other financial institution are set
forth on Schedule 8.10 hereto, subject to the right of Borrower and each
Restricted Subsidiary to establish new accounts in accordance with Section
9.13 below.
8.11 Intellectual Property. Borrower and each Restricted Subsidiary
owns or licenses or otherwise has the right to use all Intellectual Property
necessary for the operation of its business as presently conducted or
proposed to be conducted. As of the date hereof, neither Borrower nor any
Restricted Subsidiary has any Intellectual Property registered, or subject
to pending applications, in the United States Patent and Trademark Office,
the Canadian Intellectual Property Office or any similar office or agency
in the United States, Canada, any state or province thereof, any political
subdivision thereof or in any other country, other than those described in
Schedule 8.11 hereto and has not granted any licenses with respect thereto
other than as set forth in Schedule 8.11 hereto. No event has occurred
which permits or would permit after notice or passage of time or both, the
revocation, suspension or termination of such rights. To the best of
Borrower's knowledge, no slogan or other advertising device, product,
process, method, substance or other Intellectual Property or goods bearing
or using any Intellectual Property presently contemplated to be sold by or
employed by Borrower or any Restricted Subsidiary infringes any patent,
trademark, servicemark, tradename, copyright, license or other Intellectual
Property owned by any other Person presently and no claim or litigation is
pending or threatened against or affecting Borrower or any Restricted
Subsidiary contesting its right to sell or use any such Intellectual
Property. Schedule 8.11 sets forth all of the agreements or other
arrangements of Borrower and each Restricted Subsidiary pursuant to which
such Person has a license or other right to use any trademarks, logos,
designs, representations or other Intellectual Property owned by another
person as in effect on the date hereof and the dates of the expiration of
such agreements or other arrangements of such Person as in effect on the
date hereof (collectively, together with such agreements or other
arrangements as may be entered into by Borrower and each Restricted
Subsidiary after the date hereof, collectively, the "License Agreements"
and individually, a "License Agreement"). No trademark, servicemark or
other Intellectual Property at any time used by any Restricted Subsidiary
which is owned by another person, or owned by any Restricted Subsidiary
subject to any security interest, lien, collateral assignment, pledge or
other encumbrance in favor of any person other than Agent, is affixed to
any Eligible Inventory.
55
8.12 Capitalization.
(a) The issued and outstanding shares of Capital Stock of each Credit
Party (other than Parent) are directly and beneficially owned and held by the
persons indicated in the Information Certificate, and in each case all of
such shares have been duly authorized and are fully paid and
non-assessable, and, in the case of shares of Borrower owned by Parent and
shares of each Restricted Subsidiary owned, directly or indirectly, by
Borrower, are free and clear of all claims, liens, pledges and encumbrances
of any kind, except for those in favor of Agent and liens permitted under
Section 9.8 hereof.
(b) Each Credit Party is solvent and will continue to be solvent
after the creation of the Obligations, the security interests of Agent and
the other transaction contemplated hereunder, is able to pay its debts as
they mature and has (and has reason to believe it will continue to have)
sufficient capital (and not unreasonably small capital) to carry on its
business and all businesses in which it is about to engage. The assets and
properties of each Credit Party at a fair valuation and at their present
salable value are, and will be, greater than the Indebtedness of such
Credit Party, and including subordinated and contingent liabilities
computed at the amount which, to the best of Borrower's knowledge,
represents an amount which can reasonably be expected to become an actual
or mature liability.
8.13 Labor Disputes.
(a) Set forth on Schedule 8.13 hereto is a list (including dates of
termination) of all collective bargaining or similar agreements between or
applicable to Borrower or any Restricted Subsidiary and any union, labor
organization or other bargaining agent in respect of the employees of such
Person on the date hereof.
(b) There is (i) no significant unfair labor practice complaint
pending against Borrower or any Restricted Subsidiary or, to the best of
Borrower's knowledge, threatened against Borrower or any Restricted
Subsidiary, before the National Labor Relations Board, and no significant
grievance or significant arbitration proceeding arising out of or under any
collective bargaining agreement is pending on the date hereof against
Borrower or any Restricted Subsidiary or, to best of Borrower's knowledge,
threatened against Borrower or any Restricted Subsidiary, and (ii) no
significant strike, labor dispute, slowdown or stoppage is pending against
Borrower or any Restricted Subsidiary or, to the best of Borrower's
knowledge, threatened against Borrower or any Restricted Subsidiary, in
each case which alone or in the aggregate could reasonably be expected to
result in a Material Adverse Effect.
8.14 Corporate Name; Prior Transactions. Except as described in the
Information Certificate, neither Borrower nor any Restricted Subsidiary
has, during the past five years, been known by or used by any other
corporate or fictitious name or been a party to any merger, amalgamation or
consolidation, or acquired all or substantially all of the assets of any
Person, or acquired any of its property or assets out of the ordinary
course of business.
8.15 Restrictions on Restricted Subsidiaries. Except for restrictions
contained in this Agreement or any other agreement with respect to
Indebtedness of any Credit Party permitted hereunder as in effect on the
date hereof or as set forth on Schedule 8.15, there are no contractual or
consensual restrictions on any Credit Party which prohibit or otherwise
restrict (a) the transfer of cash or other assets between any Credit
Parties or (b) the ability of any Credit Party to incur Indebtedness under
the Financing Agreements or grant security interests to Agent or any Lender
in the Collateral.
8.16 Material Contracts. Schedule 8.16 hereto sets forth all Material
Contracts to which Borrower or any Restricted Party is a party or is bound
as of the date hereof. Borrower has delivered true, correct and complete
copies of such Material Contracts to Agent on or before the date hereof.
Neither Borrower nor any Restricted Subsidiary has received any notice of
the intention of any other party thereto to terminate any Material Contract
the termination of which could reasonably be expected to have a Material
Adverse Effect.
8.17 Status of Parent, Borrower and Intermediate Holding Companies. As of
the date hereof, Parent, Borrower and each Intermediate Holding Company is
not engaged in any business other than the acquisition and ownership of
Subsidiaries, making and administering Intercompany Loans, providing
management, consulting and other services to their respective Subsidiaries
and conduct incidental thereto.
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8.18 Non-Restricted Subsidiaries. Each of the representations and
warranties set forth in Sections 8.5, 8.6, 8.8 and 8.9 hereof are true and
correct as to each of the Non-Restricted Subsidiaries as if each
Non-Restricted Subsidiary were directly making such representation and
warranty; provided, that with respect to Section 8.5 hereof, any request
for an extension to file a tax return by a Non-Restricted Subsidiary does
not have to be disclosed to Agent.
8.19 Accuracy and Completeness of Information. All information furnished
by or on behalf of any Credit Party in writing to Agent or any Lender in
connection with this Agreement or any of the other Financing Agreements or
any transaction contemplated hereby or thereby, including all information
on the Information Certificate is true and correct in all material respects
on the date as of which such information is dated or certified and does not
omit any material fact necessary in order to make such information not
misleading; provided that (i) to the extent any such information is or was
based upon or constitutes a forecast or projection, Borrower only
represents that it acted in good faith and utilized reasonable assumptions,
due and careful consideration and the best information known to it at the
time in the preparation of such information and (ii) as to any information
that is or was supplied by third parties (other than Affiliates of
Borrower), Borrower represents only that it is not aware of any material
misstatement or omission therein. No event or circumstance has occurred
which has had or could reasonably be expected to have a Material Adverse
Affect, which has not been fully and accurately disclosed to Agent in
writing.
8.20 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing
Agreements shall survive the execution and delivery of this Agreement and
shall be deemed to have been made again to Agent and Lenders on the date of
each additional borrowing or other credit accommodation hereunder and shall
be conclusively presumed to have been relied on by Agent and Lenders
regardless of any investigation made or information possessed by Agent or
any Lender. The representations and warranties set forth herein shall be
cumulative and in addition to any other representations or warranties which
Borrower shall now or hereafter give, or cause to be given, to Agent or any
Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Borrower shall, and shall cause each of its
Restricted Subsidiaries to, at all times (except as permitted under Section
9.7 hereof) preserve, renew and keep in full force and effect (a) its
rights and franchises as a corporation where the failure to do so has or
could reasonably be expected to have a Material Adverse Effect and (b) its
corporate existence. Borrower shall, and shall cause each of its Restricted
Subsidiaries to, at all times maintain in full force and effect all
material Permits, licenses, trademarks, tradenames, approvals,
authorizations, leases and contracts necessary to carry on the business as
presently or proposed to be conducted. Borrower shall give Agent ten (10)
Business Days prior written notice of any proposed change in such Person's
corporate name or the corporate name of any of its Restricted Subsidiaries,
which notice shall set forth the new name and Borrower shall deliver to
Agent a copy of the amendment to the Certificate of Incorporation or
Articles of Amendment of Borrower or such Restricted Subsidiary, as the
case may be, providing for the name change certified by the Secretary of
State or other applicable Governmental Authority of the jurisdiction of
incorporation of such Person as soon as it is available. Borrower shall
not, and shall not permit any of its Restricted Subsidiaries to, change
their respective jurisdictions of incorporation unless Borrower has
provided Agent with ten (10) Business Days prior written notice of any
proposed change in such Person's jurisdiction of incorporation which notice
shall set forth the new jurisdiction of incorporation and Borrower shall
deliver to Agent a new Certificate of Incorporation certified by the
appropriate secretary of state or other applicable Governmental Authority
as soon as it is available. In connection with any of the foregoing
changes, Borrower shall execute and deliver, or cause to be executed and
delivered, such agreements, documents, and instruments as Agent may deem
reasonably necessary or desirable to protect its interests in the
Collateral at such location, including UCC and PPSA financing statements.
57
9.2 New Collateral Locations. Borrower and any of its Restricted
Subsidiaries may open any new location within the continental United States
or Canada provided Borrower (a) gives Agent five (5) Business Days prior
written notice of the intended opening of any such new location and (b)
executes and delivers, or causes to be executed and delivered, to Agent
such agreements, documents, and instruments as Agent may deem reasonably
necessary or desirable to protect its interests in the Collateral at such
location, including UCC and PPSA financing statements.
9.3 Compliance with Laws, Regulations, Etc.
(a) Borrower shall, and shall cause each of its Restricted
Subsidiaries to, at all times, comply in all material respects with all
laws, rules, regulations, licenses, approvals, orders and other Permits
applicable to it and duly observe all requirements of any foreign, Federal,
state, provincial or local Governmental Authority, including ERISA, the
Employee Retirement Security Act of 1974 (Canada), the Code, the
Occupational Safety and Health Act of 1970, as amended, the Fair Labor
Standards Act of 1938, as amended, and all statutes, rules, regulations,
orders, permits and stipulations relating to environmental pollution and
employee health and safety, including all of the Environmental Laws in each
case where the failure to do so, individually or in the aggregate, has or
could reasonably be expected to have a Material Adverse Effect.
(b) Borrower shall, and shall cause each of its Restricted
Subsidiaries to, monitor compliance in all material respects with all
Environmental Laws in all of its operations. Copies of all environmental
surveys, audits, assessments, feasibility studies and results of remedial
investigations shall be promptly furnished, or caused to be furnished, by
Borrower to Agent. Borrower shall, and shall cause each of its Restricted
Subsidiaries to, take prompt action to respond to any material non-compliance
with any of the Environmental Laws and shall regularly report to Agent on such
response.
(c) Borrower shall, and shall cause each of its Restricted
Subsidiaries to, give both oral and written notice to Agent within ten (10)
Business Days of Borrower's or any Restricted Subsidiary's receipt of any
notice of, or Borrower's or any Restricted Subsidiary's otherwise obtaining
knowledge of, (i) the occurrence of any event involving the release, spill
or discharge, threatened or actual, of any Hazardous Material or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by Borrower or any of its Restricted Subsidiaries or (B)
the release, spill or discharge, threatened or actual, of any Hazardous
Material or (C) the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or
(D) any other environmental, health or safety matter, which affects
Borrower or any of its Restricted Subsidiaries or their respective
business, operations or assets or any properties at which Borrower or any
of its Restricted Subsidiaries transported, stored or disposed of any
Hazardous Materials, in each case as described in clause (i) and (ii)
hereof, where such matter has or could reasonably be expected to have a
Material Adverse Effect.
(d) Without limiting the generality of the foregoing, whenever Agent
reasonably determines that there is material non-compliance, or any
condition which requires any action by or on behalf of Borrower or any of
its Restricted Subsidiaries in order to avoid any material non-compliance,
with any Environmental Law, Borrower shall, and shall cause each of its
Restricted Subsidiaries to, at Agent's request and Borrower's expense: (i)
cause an independent environmental engineer reasonably acceptable to Agent
to conduct such tests of the site where non-compliance or alleged
non-compliance with such Environmental Laws has occurred as to such
non-compliance and prepare and deliver to Agent a report as to such
material non-compliance setting forth the results of such tests, a proposed
plan for responding to any environmental problems described therein, and an
estimate of the costs thereof and (ii) provide to Agent a supplemental
report of such engineer whenever the scope of such material non-compliance,
or Borrower's or such Restricted Subsidiary's response thereto or the
estimated costs thereof, shall change in any material respect.
(e) Borrower shall, and shall cause each of its Restricted
Subsidiaries to, indemnify and hold harmless Agent and Lenders and their
respective, directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all
losses, claims, damages, liabilities, costs, and expenses (including
reasonable legal and attorneys' fees and expenses) directly or indirectly
arising out of or attributable to the use, generation, manufacture,
reproduction, storage, release, threatened release, spill, discharge,
disposal or presence of a Hazardous Material, including the costs of any
required or necessary repair, cleanup or other remedial work with respect
to any property of Borrower or its Restricted Subsidiaries and the
58
preparation and implementation of any closure, remedial or other required
plans. All representations, warranties, covenants and indemnifications in
this Section 9.3 shall survive the payment of the Obligations and the
termination of this Agreement.
9.4 Payment of Taxes and Claims. Borrower shall, and shall cause each of
its Restricted Subsidiaries to, duly pay and discharge all taxes,
assessments, contributions and governmental charges upon or against it or
its properties or assets, except for taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower or such Restricted Subsidiary, as the case may be,
and with respect to which adequate reserves have been set aside on its
books. Borrower shall be liable for any tax or penalties imposed on Agent
or any Lender as a result of the financing arrangements provided for herein
and Borrower agrees to indemnify and hold Agent and Lenders harmless with
respect to the foregoing, and to repay to Agent, for the benefit of
Lenders, on demand the amount thereof, and until paid by Borrower such
amount shall be added and deemed part of the Loans, provided, that, nothing
contained herein shall be construed to require Borrower to pay any income
or franchise taxes attributable to the income of Lenders from any amounts
charged or paid hereunder to Lenders. The foregoing indemnity shall survive
the payment of the Obligations and the termination of this Agreement.
9.5 Insurance. Borrower shall, and shall cause each of its Restricted
Subsidiaries to, at all times, maintain with financially sound and
reputable insurers insurance with respect to the Collateral against loss or
damage and all other insurance of the kinds and in the amounts customarily
insured against or carried by corporations of established reputation
engaged in the same or similar businesses and similarly situated. Said
policies of insurance shall be reasonably satisfactory to Agent as to form,
amount and insurer. Borrower shall furnish certificates, policies or
endorsements to Agent as Agent shall reasonably require as proof of such
insurance, and, if Borrower fails to do so, Agent is authorized, but not
required, to obtain such insurance at the expense of Borrower. All policies
shall provide for at least thirty (30) days prior written notice to Agent
of any cancellation or reduction of coverage and that Agent may act as
attorney for Borrower and each of its Restricted Subsidiaries in obtaining,
and at any time an Event of Default exists or has occurred and is
continuing, adjusting, settling, amending and canceling such insurance.
Borrower shall cause Agent to be named as a loss payee and an additional
insured (but without any liability for any premiums) under such insurance
policies and Borrower shall obtain non-contributory lender's loss payable
endorsements to all insurance policies in form and substance satisfactory
to Agent. Such lender's loss payable endorsements shall specify that the
proceeds of such insurance shall be payable to Agent as its interests may
appear and further specify that Agent and Lenders shall be paid regardless
of any act or omission by Borrower, any of Borrower's Restricted
Subsidiaries or any of its or their Affiliates. At its option, Agent may
apply any insurance proceeds received by Agent at any time to the cost of
repairs or replacement of Collateral and/or to payment of the Obligations,
whether or not then due, in any order and in such manner as Agent may
determine or hold such proceeds as cash collateral for the Obligations.
9.6 Financial Statements and Other Information.
(a) Borrower shall, and shall cause each of its Subsidiaries to, keep
proper books and records in which true and complete entries shall be made
of all dealings or transactions of or in relation to the Collateral and the
business of Borrower and its Subsidiaries in accordance with GAAP. Borrower
shall promptly furnish to Agent and Lenders all such financial and other
information as Agent shall reasonably request relating to the Collateral
and the assets, business and operations of Borrower and each of its
Restricted Subsidiaries, and to notify the auditors and accountants of
Borrower and its Subsidiaries that Agent is authorized to obtain such
information directly from them. Without limiting the foregoing, Borrower
shall furnish or cause to be furnished to Agent, the following: (i) within
thirty (30) days after the end of each fiscal month, monthly unaudited
consolidated financial statements, and unaudited consolidating financial
statements (including in each case balance sheets, statements of income and
loss and statements of cash flow), all in reasonable detail, fairly
presenting the financial position and the results of the operations of
Borrower, its Restricted Subsidiaries and Yearntree Ltd. as of the end of
and through such fiscal month, certified to be correct in all material
respects by the chief financial officer of Borrower, subject to normal
year-end adjustments and no footnotes and accompanied by a compliance
certificate substantially in the form of Exhibit D hereto, along with a
schedule in form reasonably satisfactory to Agent of the calculations used
in determining, as of the end of such month, whether Borrower is in
59
compliance with the covenants set forth in Section 9.18 and 9.19 of this
Agreement for such month, if required and (ii) within one hundred (100)
days after the end of each fiscal year, audited consolidated financial
statements and unaudited consolidating financial statements of Parent and
its Subsidiaries (including in each case balance sheets, statements of
income and loss and statements of cash flow), and the accompanying notes
thereto, all in reasonable detail, fairly presenting the financial position
and the results of the operations of Parent and its Subsidiaries as of the
end of and for such fiscal year, together with the unqualified opinion of
independent certified public accountants with respect to the audited
consolidated financial statements, which accountants shall be an
independent accounting firm selected by Borrower and reasonably acceptable
to Agent, that such audited consolidated financial statements have been
prepared in accordance with GAAP, and present fairly the results of
operations and financial condition of Parent and its Subsidiaries as of the
end of and for the fiscal year then ended.
(b) Borrower shall promptly notify Agent in writing of the details
of (i) any loss, damage, investigation, action, suit, proceeding or claim
relating to Collateral or which would result in any material adverse change
in any Credit Party's business, properties, assets, goodwill or condition,
financial or otherwise, (ii) any Material Contract being terminated or
amended or any new Material Contract entered into (in which event Borrower
shall provide Agent with a copy of such Material Contract), (iii) any
order, judgment or decree in excess of $1,000,000 shall have been entered
against Borrower or any Restricted Subsidiary or any of its properties or
assets (excluding any properties or assets of or consisting of the
Subsidiaries of Parent other than Borrower and the Restricted
Subsidiaries), (iv) any notification of a material violation of laws or
regulations received by any Credit Party, (v) any ERISA Event with respect
to a Plan maintained, or contributed to, by any ERISA Affiliate that could
reasonably be expected to result in liability of any Credit Party in an
amount in excess of $500,000, and (vi) the occurrence of any Event of
Default or act, condition or event which, with notice or the passage of
time or giving of notice or both, would constitute an Event of Default.
(c) Borrower shall promptly after the sending or filing thereof
furnish or cause to be furnished to Agent copies of all reports, registration
statements or filings which any Credit Party files with the Securities and
Exchange Commission, any Canadian securities exchange, any provincial
securities commission, any other national or local securities exchange or
the National Association of Securities Dealers, Inc.
(d) Borrower shall furnish or cause to be furnished to Agent such
budgets, forecasts, projections and other information respecting the
Collateral and the business of the Borrower and the Restricted
Subsidiaries, as Agent may, from time to time, reasonably request. Agent is
hereby authorized to deliver a copy of any financial statement or any other
information relating to the business of any Credit Party to any court or
other Governmental Authority or to any Lender or Participant or prospective
Lender or Participant, subject in each case to the requirements of Section
13.5. Borrower hereby irrevocably authorizes and directs all accountants or
auditors to deliver to Agent, at Borrower's expense, copies of the
financial statements of Borrower and its Subsidiaries and any reports or
management letters prepared by such accountants or auditors on behalf of
Borrower or any of its Restricted Subsidiaries and to disclose to Agent and
Lenders such information as they may have regarding the business of
Borrower and any of its Restricted Subsidiaries. Any documents, schedules,
invoices or other papers delivered to Agent or any Lender may be destroyed
or otherwise disposed of by Agent or such Lender one (1) year after the
same are delivered to Agent or such Lender, except as otherwise designated
by Borrower to Agent or such Lender in writing.
(e) Borrower shall furnish or cause to be furnished to Agent
promptly, but in no event later than the date on which any filing is
required to be made with any national securities exchange, all information
and supporting material relating to (i) the failure of any representation
or warranty contained in Sections 8.5, 8.6, 8.8 and 8.9 to be true and
correct as to any Non-Restricted Subsidiary as if such Non-Restricted
Subsidiary were making such representation and warranty and/or (ii) any
event or condition applicable to any Non-Restricted Subsidiary which could
cause a Material Adverse Effect.
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9.7 Sale of Assets, Consolidation, Merger, Amalgamations, Dissolution,
Etc. Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly,
(a) merge into or with or consolidate or amalgamate with any other
Person or permit any other Person to merge into or with or consolidate or
amalgamate with it except (i) the merger or consolidation of one or more
Restricted Subsidiaries with and into Borrower or another Restricted
Subsidiary; provided, that, each of the following conditions is satisfied
as determined by Agent: (A) Agent shall have received not less than ten
(10) Business Days' prior written notice of the intention of any Restricted
Subsidiary to so merge, amalgamate or consolidate, which notice shall set
forth in reasonable detail satisfactory to Agent, the persons that are
merging, amalgamating or consolidating, which person will be the surviving
entity and the locations of the assets of the persons that are merging,
amalgamating or consolidating, (B) as of the effective date of the merger,
amalgamation or consolidation and after giving effect thereto, no Event of
Default, or act, condition or event which with notice or passage of time or
both would constitute an Event of Default, shall exist or have occurred,
(C) Agent shall have received, true, correct and complete copies of all
agreements, documents and instruments relating to such merger, amalgamation
or consolidation, including, but not limited to, the certificate or
certificates of merger or articles of amalgamation to be filed with each
appropriate Secretary of State (with a copy as filed promptly after such
filing) or other Governmental Authority and (D) the surviving corporation
shall expressly confirm, ratify and assume the Obligations the Intercompany
Loans and the Financing Agreements to which it and the merged entity are a
party in writing, in form and substance reasonably satisfactory to Agent,
and execute and deliver such other agreements, documents and instruments as
Agent may reasonably request in connection therewith to ensure that Agent
maintains a perfected security interest in all the assets of the surviving
corporation;
(b) sell, assign, lease, transfer, abandon or otherwise dispose of
any assets, Capital Stock or Indebtedness to any other Person, except for
(i) sales of Inventory in the ordinary course of business;
(ii) the replacement of Eligible Equipment with other Equipment
that satisfies all the criteria of "Eligible Equipment" to the satisfaction of
Agent and which has an appraised value of at least the appraised value of
the Equipment being replaced;
(iii) the sale or other disposition of assets of any Restricted
Subsidiary to another Restricted Subsidiary; provided that each of the
following conditions is satisfied as determined by Agent: (A) Agent shall have
received not less than ten (10) Business Days' prior written notice of the
intention of such sale or disposition setting forth the parties involved,
the assets involved, and providing all other information, documents and
agreements as Agent shall request, (B) as to the effective date of such
sale or disposition, no Event of Default shall exist, (C) the applicable
Restricted Subsidiary of Borrower acquiring the assets shall have taken all
actions and executed all documents deemed necessary or appropriate by Agent
to maintain Agent's perfected lien on such assets and (D) all proceeds of
such sale or disposition are paid to Agent for application to the
Obligations in accordance with Section 6.11 hereof;
(iv) any arrangement whereby Borrower or any Restricted Subsidiary
shall sell any Equipment (other than Eligible Equipment) owned by it to another
Person for the purpose of leasing such property from such Person; provided,
that (A) no Event of Default exists at the time of, or after giving effect
to, the proposed sale and leaseback transaction and (B) (i) if such
Equipment to be sold has an aggregate fair market value of at least
$2,000,000, Borrower shall have delivered a certificate to Agent at least
five (5) days prior to entering into such sale and leaseback transaction
certifying that no Event of Default exists or would result after giving
effect to the proposed transaction and identifying the Equipment subject to
such sale and leaseback transaction, and (2) if such Equipment to be sold
has an aggregate fair market value of less than $2,000,000 but more than
$50,000 Borrower shall have delivered notice of such sale to Agent
(identifying the Equipment sold) no later than ten (10) days after the
consummation of such sale and (3) if such Equipment to be sold has an
aggregate fair market value of less than $50,000, then no notice to Agent
shall be required.
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(v) the sale or other disposition of (A) the Capital Stock of
any Restricted Subsidiary or substantially all the assets of a Restricted
Subsidiary, (B) any Eligible Equipment having an aggregate fair market
value of at least $350,000, or (C) any Eligible Real Property Related
Interests having an aggregate fair market value of at least $500,000;
provided, that in each case above (1) no Event of Default exists at the
time of, or after giving effect to, the proposed sale or disposition, (2)
Borrower has delivered a certificate to Agent at least ten (10) days prior
to such sale or disposition identifying the Capital Stock, assets, Eligible
Equipment or Eligible Real Property Related Interests subject to such sale
or disposition, setting forth a good faith estimate of the expected net
proceeds from such sale or disposition and attaching thereto the applicable
buy/sell documents to be executed in connection with such sale or
disposition; provided, further, that if a Trigger Event exists pursuant to
clause (b) of the definition thereof or if Agent determines, based on its
review of such buy/sell documents and after giving effect to such sale or
disposition (including the removal of any Collateral to be sold from the
Borrowing Base if included therein) that a Trigger Event pursuant to clause
(b) of the definition thereof will result, then all proceeds of such sale
or disposition of the interests of Borrower or such Restricted Subsidiary
shall be paid to Agent for application to the Obligations in accordance
with Section 6.11 hereof. Notwithstanding the foregoing, the liens on the
assets to be sold shall not be deemed released and Agent shall have no
obligation to release such liens in connection with any such sale or
disposition until Agent receives satisfactory evidence (including copies of
executed buy/sell documents) that (i) such sale or disposition was
consummated in accordance with the buy/sell documents previously provided
to Agent and (ii) Borrower or Agent, as applicable, received net proceeds
from such sale or disposition in the amount contemplated by such buy/sell
agreements;
(vi) the sale or other disposition of Eligible Equipment for
which the fair market value of such Equipment does not exceed $350,000 and
so long as the aggregate fair market value of all such Eligible Equipment
sold under this clause (vi) does not exceed $500,000 in the aggregate in
any fiscal year of Borrower; provided, that (A) no Event of Default exists
at the time of or after giving effect to, the proposed sale or disposition
and (B) as long as (1) no Trigger Event exists pursuant to clause (b) of
the definition thereof or would result from such sale or disposition,
Borrower shall have notified Agent of such sale or disposition no later
than ten (10) days after the consummation of such sale or disposition
describing the Eligible Equipment sold or (2) a Trigger Event exists
pursuant to clause (b) of the definition thereof or would result from such
sale or disposition, Borrower shall have notified Agent of such sale or
disposition at least five (5) days prior to entering into such sale or
disposition and shall cause all proceeds from such sale or disposition to
be applied to the Obligations in accordance with Section 6.11 hereof; and
(vii) the sale or other disposition (other than sale and Leaseback
Transactions) of any assets other than assets included in the Borrowing
Base; provided, that (A) no Event of Default exists at the time of, or
after giving effect to, the proposed sale or disposition and (B) if such
assets have an aggregate fair market value of (1) at least $1,000,000,
Borrower shall have delivered a certificate to Agent at least five (5) days
prior to entering into such sale certifying that no Event of Default exists
or would result after giving effect to the proposed transaction and
identifying the assets subject to such sale, (2) less than $1,000,000 but
more than $100,000, Borrower shall have delivered notice of such sale to
Agent (identifying the assets sold) no later than ten (10) days after the
consummation of such sale or (3) less than $100,000, then no notice shall
be required hereunder.
(c) wind up, liquidate, dissolve, suspend or discontinue doing
business unless (i) otherwise permitted under this Section 9.7 or (ii) such
Restricted Subsidiary is inactive and has assets with a net book value of
less than $100,000; or
(d) agree to do any of the foregoing.
To the extent Borrower or any Restricted Subsidiary engages in any
transaction permitted under this Section 9.7 that causes Schedule 1.86
{Operating Subsidiaries} to be inaccurate, Borrower shall deliver to Agent
a revised Schedule 1.86 {Operating Subsidiaries} accounting for such change
within five (5) days after the consummation of such transaction.
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9.8 Encumbrances. Borrower shall not, and shall not permit any of its
Restricted Subsidiaries to, create, incur, assume or suffer to exist any
security interest, mortgage, pledge, lien, charge, hypothec or other
encumbrance of any nature whatsoever on any of its assets or properties,
including the Collateral, except:
(a) the security interests and liens of Agent for itself and the
benefit of Lenders;
(b) liens securing the payment of taxes, either not yet overdue or
the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrower or such Restricted
Subsidiary, as the case may be, and with respect to which adequate reserves
have been set aside on its books;
(c) non-consensual statutory liens (other than liens securing the
payment of taxes) arising in the ordinary course of Borrower's or such
Restricted Subsidiary's business to the extent: (i) such liens secure
Indebtedness which is not overdue or (ii) such liens secure Indebtedness
relating to claims or liabilities which are fully insured and being defended at
the sole cost and expense and at the sole risk of the insurer or being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower or such Restricted Subsidiary, in each case prior to
the commencement of foreclosure or other similar proceedings and with
respect to which adequate reserves have been set aside on its books;
(d) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property Related Interests which do
not interfere in any material respect with the use of such Real Property or
ordinary conduct of the business of Borrower or such Restricted Subsidiary
as presently conducted thereon or materially impair the value of the Real
Property Related Interests which may be subject thereto;
(e) purchase money security interests in Equipment (including Capital
Leases) and purchase money mortgages on real estate in each case securing
Indebtedness permitted under Section 9.9(b) so long as such security
interests and mortgages do not apply to any property of Borrower or such
Restricted Subsidiary other than Equipment or real estate so acquired, as
the case may be;
(f) pledges and deposits of cash by Borrower or any of its Restricted
Subsidiaries after the date hereof in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security benefits consistent with the current practices of
Borrower or such Restricted Subsidiary as of the date hereof;
(g) liens securing the repayment obligations of any Restricted
Subsidiary under its Intercompany Loans, which liens are subordinated, on
terms and conditions acceptable to Agent, to the liens granted by such
Restricted Subsidiary in favor of Agent to secure the Obligations;
(h) the security interests and liens set forth on Schedule 9.8 hereto;
(i) any lien existing on any property or asset prior to the
acquisition thereof by Borrower or any Restricted Subsidiary; provided that
(x) such lien is not created in contemplation of or in connection with such
acquisition, (y) such lien does not apply to any other property or assets
of Borrower or any of its Restricted Subsidiaries and (z) such lien does
not apply to accounts or inventory of Borrower or any Restricted Subsidiary
unless Agent has received an intercreditor agreement, in form and substance
satisfactory to Agent, from the applicable lien holder, governing, among
other things, allocation and application of proceeds and restricting
commingling of assets and proceeds;
(j) pledges and deposits of cash to secure the performance of bids,
trade contracts (other than for Indebtedness), leases (other than Capital
Leases), statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of
business;
(k) liens securing Refinancing Indebtedness permitted under
Section 9.9 hereof, but only to the extent that the Indebtedness so
refinanced was secured, and only covering assets which secured the
Indebtedness being refinanced; and
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(l) liens of mechanics, materialmen or repairmen arising in the
ordinary course of business which are not delinquent for more than 60 days or
which remain payable without penalty or which are being contested in good
faith by appropriate proceedings diligently pursued for which adequate
reserves have been set aside on the books of Borrower or the applicable
Restricted Subsidiary and, in any event, for which foreclosure or other
similar proceedings with respect to any such lien have not commenced.
9.9 Indebtedness. Borrower shall not, and shall not permit any of its
Restricted Subsidiaries to, incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any Indebtedness, or make any
payments in respect of any Indebtedness, except for the following categories
of Indebtedness and Permitted Payments in connection with such Indebtedness:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) incurred
after the date hereof in an aggregate amount at any one time outstanding
not to exceed $15,000,000 to the extent not incurred or secured by liens
(including Capital Leases) in violation of any other provision of this
Agreement including Section 9.8(e) hereof;
(c) (i) Intercompany Loans existing on the date hereof and made after
the date hereof by (A) Borrower to any Intermediate Holding Company or to any
Operating Company or (B) any Intermediate Holding Company to any Operating
Company and (ii) intercompany loans made by Parent to Borrower; provided,
that in each case above, such Indebtedness shall be subject to the terms
and conditions of the Affiliate Subordination Agreement;
(d) the existing Indebtedness set forth on Schedule 9.9 hereto;
provided, that, during the existence of a Trigger Event (or if a Trigger Event
would otherwise result after giving effect to any action prohibited in the
following clauses (i) and (ii)), (i) Borrower shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly, (A) amend,
modify, alter or change the terms of such Indebtedness or any agreement,
document or instrument related thereto as in effect immediately prior to such
Trigger Event in a manner less favorable to the Borrower or such Restricted
Subsidiary unless otherwise permitted by this Section 9.9, or (ii) redeem,
retire (unless constituting a final scheduled payment), defease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose. Borrower shall, and shall cause each of its
Restricted Subsidiaries to, furnish to Lender all notices or demands in
connection with such Indebtedness either received by Borrower or any
Restricted Subsidiary or on its or their behalf, promptly after the receipt
thereof, or sent by Borrower or any Restricted Subsidiary or on its or their
behalf, concurrently with the sending thereof, as the case may be;
(e) Hedging Agreements of Borrower or any Restricted Subsidiary
entered into in respect of Indebtedness permitted hereunder so long as the
entering into of such Hedging Agreement are bona fide hedging activities for
the purpose of mitigation risks to which Borrower and its Subsidiaries are
exposed in the conduct of their business or the management of their
liabilities;
(f) Indebtedness incurred by virtue of an Acquisition after the date
hereof of any Person which is assumed by Borrower or a Restricted Subsidiary or
Indebtedness incurred by virtue of an Acquisition after the date hereof of
any Person which becomes a Restricted Subsidiary after the date hereof, in
either case, pursuant to an Acquisition, which Indebtedness in all such
cases exists at the time of such Acquisition and is not created in
contemplation of such event and where such Acquisition is permitted by this
Agreement; provided that (i) recourse for any Indebtedness incurred
pursuant to an Acquisition shall only be against the Person acquired
pursuant to such Acquisition or the applicable Restricted Subsidiary which
acquired assets pursuant to such Acquisition and (ii) during the existence
of a Trigger Event (or if a Trigger Event would otherwise result after
giving effect to any action prohibited in the following clauses (A) and
(B)), Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, (A) amend, modify, alter or change
the terms of such Indebtedness or any agreement, document or instrument
related thereto as in effect immediately prior to such Trigger Event in a
manner less favorable to the Borrower or such Restricted Subsidiary unless
otherwise permitted by this Section 9.9, or (B) redeem, retire (unless
constituting a final scheduled payment), defease, purchase or otherwise
64
acquire such Indebtedness, or set aside or otherwise deposit or invest any
sums for such purpose. Borrower shall, and shall cause each of its
Restricted Subsidiaries to, furnish to Lender all notices or demands in
connection with such Indebtedness either received by Borrower or any
Restricted Subsidiary or on its or their behalf, promptly after the receipt
thereof, or sent by Borrower or any Restricted Subsidiary or on its or
their behalf, concurrently with the sending thereof, as the case may be;
(g) Indebtedness incurred by a Restricted Subsidiary pursuant to a
merger, consolidation or amalgamation permitted under Section 9.7(a) hereof so
long as such Indebtedness (i) exists at the time of such merger, consolidation
or amalgamation and (ii) remains subject to the same restrictions prior to
such merger, amalgamation or consolidation as imposed by this Section 9.9;
(h) unsecured Indebtedness of Borrower or any Restricted Subsidiary
incurred after the date hereof that is issued to a seller of assets or stock
in connection with an Acquisition or investment permitted hereunder; provided
that the agreements, documents or instruments evidencing such Indebtedness (i)
subordinate such Indebtedness to the Obligations on terms and conditions that
are no less favorable to Agent and the Lenders than those terms and conditions
set forth in the form attached hereto as Exhibit F and (ii) have been copied
and delivered to Agent for its records;
(i) extensions, renewals or refinancings by Borrower or any
Restricted Subsidiary of any Indebtedness permitted under this Section 9.9
so long as (i) such Indebtedness ("Refinancing Indebtedness") is in an
original aggregate principal amount not greater than the aggregate
principal amount of, and unpaid interest on, the Indebtedness being
extended, renewed or refinanced plus the amount of any premiums required to
be paid thereon and fees and expenses associated therewith, (ii) if the
Indebtedness being extended, renewed or refinanced is subordinated to the
Obligations, such Refinancing Indebtedness is subordinated to the
Obligations on terms not less favorable to the Lenders than the terms of
the subordination provisions governing such Indebtedness being extended,
renewed or refinanced, (iii) at the time of and after giving effect to such
renewal or refinancing, no Event of Default shall have occurred and be
continuing and (iv) the other terms and conditions of such Refinancing
Indebtedness (including amortization, interest rates and fees) are no less
favorable to Borrower or such Restricted Subsidiary, as applicable, than
the Indebtedness being extended, renewed or refinanced;
(j) Indebtedness of Borrower or any Restricted Subsidiary consisting
of contingent reimbursement obligations under surety, indemnity, performance,
release and appeal bonds and guarantees thereof, in each case securing
obligations not constituting Indebtedness for borrowed money and obtained
in the ordinary course of business;
(k) contingent liability of Borrower or any Restricted Subsidiary
arising out of endorsements on checks and other negotiable instruments for
deposit or collection in the ordinary course of business;
(l) contingent liabilities incurred after the date hereof in respect
of anyndemnification, adjustment of purchase price, earn-out, deferred
compensation or similar obligations of Borrower or any Restricted
Subsidiary incurred in connection with any Acquisition; provided that
recourse for any Indebtedness under this clause (l) shall only be against
the Person acquired pursuant to such Acquisition or the applicable
Restricted Subsidiary which acquired assets pursuant to such Acquisition;
(m) Indebtedness of Borrower or any Restricted Subsidiary incurred
after the date hereof in respect of any stock appreciation rights, including
the stock appreciation rights, "phantom" stock plans, non-competition
agreements, redeemable preferred stock, subscription and stockholders
agreements and other incentive and bonus plan and similar arrangements made
in connection with an Acquisition by such Person or the retention of
executives, officers or employees by such Person;
(n) Indebtedness of Borrower or any Restricted Subsidiary in respect
of capital and operating leases incurred in connection with sale and lease
back transactions permitted under Section 9.7(b)(iv); and
(o) other unsecured Indebtedness incurred after the date hereof and
not otherwise permitted hereunder in an aggregate principal amount not
exceeding $5,000,000 at any one time outstanding; provided that at the time
of and after giving effect to such incurrence of Indebtedness no Event of
Default shall have occurred and be continuing.
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9.10 Loans, Investments, Guarantees, Etc. Borrower shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly, make
any loans or advance money or property to any person, or invest in (by
capital contribution, dividend or otherwise) or purchase or repurchase the
Capital Stock or Indebtedness or all or a substantial part of the assets or
property of any person, or guarantee, assume, endorse, or otherwise become
responsible for (directly or indirectly) the Indebtedness, performance,
obligations or dividends of any Person or agree to do any of the foregoing,
except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) investments in: (i) short-term direct obligations of the United
States Government, (ii) negotiable certificates of deposit issued by any bank
satisfactory to Agent, payable to the order of the Borrower or any
Restricted Subsidiary or to bearer and delivered to Agent, and (iii)
commercial paper rated A1 or P1; provided, that, as to any of the
foregoing, unless waived in writing by Agent, Borrower shall, and shall
cause each of its Restricted Subsidiaries to, take such actions as are
deemed necessary by Agent to perfect the security interest of Agent in such
investments;
(c) Intercompany Loans permitted under Section 9.9 hereof;
(d) Borrower may make other investments in Persons (other than
investments in Restricted Subsidiaries unless pursuant to an Acquisition or an
Intercompany Loan permitted under Section 9.9 hereof); provided that at the
time of making such investment (i) no Trigger Event exists or would result
from making the proposed investment, (ii) if the investment involves an
Acquisition then the following conditions shall also apply: (A) Borrower
shall deliver to Agent a certificate signed by an authorized officer of
Borrower describing the Acquisition, (B) if the Acquisition is of a Person,
then Borrower shall state in such certificate whether it intends such
Person to be an Operating Company, a Restricted Subsidiary (other than an
Operating Company) or a Non-Restricted Subsidiary, (C) if Borrower intends
for such acquired Person to be an Operating Company or if Borrower intends
that the acquired assets (in the case of an asset Acquisition) be included
in the Borrowing Base, then Borrower must obtain the prior written approval
of Agent (which approval shall be based on, among other things,
satisfactory results of such field examinations, audits, appraisals and
other due diligence as Agent shall require) and (D) in the event the
Acquisition consists of an acquisition of assets or of a Person designated
as a Restricted Subsidiary, then Borrower shall, and shall cause such
Restricted Subsidiary (and any other applicable Restricted Subsidiary) to,
execute such guarantees, security agreements, pledge agreements and other
agreements, documents and instruments as Agent shall require in form and
substance satisfactory to Agent, to further secure the Obligations and
(iii) if the investment involves the formation of a direct Subsidiary of
Borrower which Subsidiary proposes to make an Acquisition of a Person to be
designated as a Restricted Subsidiary or an Acquisition of assets to be
included in the Borrowing Base, then such Subsidiary shall be designated by
Borrower as a Restricted Subsidiary and Borrower shall, and shall cause
such newly designated Restricted Subsidiary to, execute such guarantees,
security agreements, pledge agreements and other agreements, documents and
instruments as Agent shall require in form and substance satisfactory to
Agent, to further secure the Obligations; and
(e) Any Restricted Subsidiary may (i) make an Acquisition of assets
or an Acquisition of a Person to be designated as a Restricted Subsidiary;
provided that at the time of making such Acquisition (A) no Trigger Event
exists or would result from making the proposed Acquisition, (B) Agent
receives, on the day such Acquisition is made, a certificate signed by an
authorized officer of the Restricted Subsidiary making the Acquisition
describing the Acquisition, (C) if the Acquisition is of a Person, then
such certificate shall state whether it intends such Person to be an
Operating Company or a Restricted Subsidiary (other than an Operating
Company), (D) if such acquired Person is to be an Operating Company or if
it is intended that the acquired assets (in the case of an asset
Acquisition) be included in the Borrowing Base, then Borrower and such
Restricted Subsidiary must obtain the prior written approval of Agent
(which approval shall be based on, among other things, satisfactory results
of such field examinations, audits, appraisals and other due diligence as
66
Agent shall require) and (E) in the event the Acquisition consists of an
acquisition of assets or of a Person designated as a Restricted Subsidiary,
then Borrower shall cause such Restricted Subsidiary (and any other
applicable Restricted Subsidiary) to execute such guarantees, security
agreements, pledge agreements and execute, or cause to be executed and/or
delivered, other agreements, documents and instruments as Agent shall
require in form and substance satisfactory to Agent, to further secure the
Obligations and (ii) form a direct Subsidiary of such Restricted Subsidiary
for the purpose of making an Acquisition described in clause (i) above;
provided that at the time of forming such Subsidiary, (A) such Subsidiary
shall be designated as a Restricted Subsidiary hereunder and Borrower shall
cause such newly designated Restricted Subsidiary (and any other applicable
Restricted Subsidiary) to execute such guarantees, security agreements,
pledge agreements and execute, or cause to be executed and/or delivered,
other agreements, documents and instruments as Agent shall require in form
and substance satisfactory to Agent to further secure the Obligations.
To the extent Borrower or any Restricted Subsidiary engages in any
transaction under this Section 9.10 that causes Schedule 1.86 {Operating
Subsidiaries} to be inaccurate, Borrower shall deliver to Agent a revised
Schedule 1.86 {Operating Subsidiaries} accounting for such change within
five (5) days after the consummation of such transaction.
9.11 Dividends and Redemptions. Borrower shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly, during the
existence of a Trigger Event (or if a Trigger Event would result after
giving to any of the foregoing), declare or pay any dividends except for
Permitted Dividends on account of any shares of class of Capital Stock of
Borrower or any Restricted Subsidiary now or hereafter outstanding, or set
aside or otherwise deposit or invest any sums for such purpose, or redeem,
retire, defease, purchase or otherwise acquire any shares of any class of
Capital Stock (or set aside or otherwise deposit or invest any sums for
such purpose) for any consideration other than Capital Stock or apply or
set apart any sum, or make any other distribution (by reduction of capital
or otherwise) in respect of any such shares or agree to do any of the
foregoing except that notwithstanding the existence of a Trigger Event: (a)
any Restricted Subsidiary may make dividends to Borrower, (b) any
Restricted Subsidiary of an Operating Company may make dividends to an
Operating Company and (c) any Operating Company may make dividends to an
Intermediate Holdings Company so long as such Intermediate Holdings Company
immediately dividends such amounts to Borrower.
9.12 Transactions with Affiliates; Management Fees. Borrower shall not,
and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly,
(a) purchase, acquire or lease any property from, or sell, transfer
or lease any property to, any officer, director, agent or other Affiliate of
Borrower or such Restricted Subsidiary, except in the ordinary course of
and pursuant to the reasonable requirements of Borrower's or such
Restricted Subsidiary's business (as the case may be) and upon fair and
reasonable terms no less favorable to Borrower or such Restricted
Subsidiary than Borrower or such Restricted Subsidiary would obtain in a
comparable arm's length transaction with an unaffiliated person; or
(b) incur, or make any payments in respect of, obligations (whether
by dividend, loan or otherwise) consisting of management, consulting or other
fees for management or similar services, or incur, or make any payments in
respect of, any Indebtedness owing to any Affiliate of Borrower or such
Restricted Subsidiary, except (i) in respect of obligations permitted under
Sections 9.9(c), 9.9(d), 9.9(f), 9.9(g), 9.9(h), 9.9(l), 9.9(m), 9.10 and
9.11 hereof, (ii) reasonable compensation to officers, employees and
directors for services rendered to Borrower or such Restricted Subsidiary
in the ordinary course of business, (iii) in respect of Professional
Agreements set forth on Schedule 9.12 and Permitted Payments thereunder;
provided, that if any Professional Agreement is between Affiliates of
Parent or between an Affiliate of Parent and Parent, then such Professional
Agreement shall be further subject to the Affiliate Subordination Agreement
and (iv) indemnification payments to directors of Borrower or any
Restricted Subsidiary under any indemnification arrangement so long as (A)
no Event of Default under Section 10.1(a) exists and (B) the aggregate
amount of such indemnification payments made in any fiscal year of Borrower
does not exceed $1,000,000 in excess of any reimbursements made in
connection with director and officer insurance policies. Borrower or any
Restricted Subsidiary may enter into additional Professional Agreements
from time to time so long as (i) no Trigger Event exists or would result
from the consummation of such transaction, (ii) such Professional
Agreements are entered into in connection with an Acquisition permitted
hereunder and (iii) Borrower delivers to Agent a revised Schedule 9.12
{Professional Agreements} accounting for such new Professional Agreement
within five (5) days after the execution of such Professional Agreement.
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9.13 Additional Bank Accounts. Borrower shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly, open, establish
or maintain any deposit account, investment account or any other account
with any bank or other financial institution, other than the Depository
Accounts and the Concentration Account and the accounts set forth in
Schedule 8.10 hereto, except: (a) as to any new or additional Depository
Accounts and other such new or additional accounts which contain any
Collateral or proceeds thereof, with the prior written consent of Agent and
subject to such conditions thereto as Agent may establish, (b) as to any
accounts used by Borrower or any of its Restricted Subsidiaries to make
payments of payroll and (c) xxxxx cash accounts not to exceed a balance of
$1,000,000 in the aggregate for Borrower and all Restricted Subsidiaries.
9.14 Compliance with ERISA and Operation of Canadian Pension Plans.
(a) Borrower shall, and shall cause each of its ERISA Affiliates, to:
(i) maintain each Plan in compliance in all material respects with the
applicable provisions of ERISA, the Code, other Federal and State law and
their foreign equivalents to the extent applicable; (ii) cause each Plan
which is qualified under Section 401(a) of the Code to maintain such
qualification; (iii) not terminate any of such Plans so as to incur any
material liability to the Pension Benefit Guaranty Corporation; (iv) not
allow or suffer to exist any prohibited transaction involving any of such
Plans or any trust created thereunder which would subject Borrower or such
ERISA Affiliate to a material tax or penalty or other liability on
prohibited transactions imposed under Section 4975 of the Code or ERISA;
(v) make all required contributions to any Plan which it is obligated to
pay under Section 302 of ERISA, Section 412 of the Code or the terms of
such Plan; (vi) not allow or suffer to exist any accumulated funding
deficiency, whether or not waived, with respect to any such Plan; or (vii)
allow or suffer to exist any occurrence of any event or condition which
presents a material risk of termination by the Pension Benefit Guaranty
Corporation of any such Plan that is a single employer plan, which
termination could result in any material liability to the Pension Benefit
Guaranty Corporation.
(b) With respect to any Canadian Pension Plan maintained by any
Credit Party: (i) such Credit Party shall administer such Canadian Pension
Plan in accordance with the requirements of the applicable pension plan
texts, funding agreements, the Income Tax Act (Canada) and applicable
provincial pension benefits legislation; (ii) such Credit Party shall
deliver to Agent an undertaking of the funding agent for such Canadian
Pension Plan stating that the funding agent will notify Agent within seven
(7) days of such Credit Party's failure to make any required contribution
to such Canadian Pension Plan; (iii) such Credit Party shall not accept
payment of any amount from such Canadian Pension Plan without the prior
written consent of Agent; (iv) without the prior written consent of Agent,
such Credit Party shall not terminate, or cause to be terminated, such
Canadian Pension Plan if such plan would have a solvency deficiency on
termination; (v) such Credit Party shall promptly provide Agent with any
documentation relating to such Canadian Pension Plan as Agent may
reasonably request; (vi) such Credit Party shall notify Agent within thirty
(30) days of (A) a material increase in the liabilities of such Canadian
Pension Plan, (B) the establishment of a new registered pension plan, (C)
commencing payment of contributions to such Canadian Pension Plan to which
such Credit Party had not previously been contributing.
9.15 End of Fiscal Years; Fiscal Quarters. Borrower shall, and shall cause
each of its Restricted Subsidiaries to, for financial reporting purposes,
cause its (a) fiscal years to end on December 31 of each year and (b)
fiscal quarters to end on March 31, June 30, September 30 and December 31
of each year.
9.16 Change in Business. Borrower shall not permit any of its Restricted
Subsidiaries to engage in any business other than the business of such
Restricted Subsidiary on the date hereof or on the date of designation as a
Restricted Subsidiary and any business reasonably related, ancillary or
complimentary to the business in which such Restricted Subsidiary is
engaged on the date hereof or on the date of designation as a Restricted
Subsidiary.
9.17 No Amendments. During the existence of a Trigger Event, Borrower shall
not, and shall not permit any of its Restricted Subsidiaries to, amend or
otherwise modify, or waive any rights under, (i) such Person's articles or
certificate of incorporation and by bylaws, (ii) the Tax Sharing Agreement;
(iii) the Professional Agreements or (iv) any other document, agreement or
instrument evidencing obligations under Professional Agreements and those
categories of Indebtedness, in each case as described in clauses (a), (b)
and (c) of the definition of "Permitted Payments," if in any case, such
amendment, modification or waiver could reasonably be expected to be
adverse to the interest of the Lenders.
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9.18 Pre-Tax Net Income. At any time that a Trigger Event exists, Borrower
shall at the end of each month (including as of the end of the month
immediately prior thereto) have cumulative Pre-Tax Net Income from the
period beginning January 1 of such year through the end of such month of at
least the following amounts for the following periods:
Period beginning January 1 of such year Cumulative
and ending on the last day of:...... Pre-Tax Net Income:
----------------------------------------- ------------------
January $ (750,000)
February $ (1,500,000)
March $ (750,000)
April $ (0)
May $ 1,000,000
June $ 2,000,000
July $ 3,000,000
August $ 4,000,000
September $ 5,000,000
October $ 6,000,000
November $ 7,000,000
December $ 8,000,000
9.19 Fixed Charge Coverage Ratio. At any time that a Trigger Event exists,
Borrower shall at all times (including as of the end of the month
immediately prior thereto) have and shall maintain a Fixed Charge Coverage
Ratio for the 12-month period then ended of not less than 1.0 to 1.0.
9.20 Costs and Expenses. Borrower shall pay to Agent on demand all
reasonable costs, expenses, filing fees and taxes paid or payable in
connection with the preparation, negotiation, execution, delivery,
recording, administration, collection, liquidation, enforcement and defense
of the Obligations, Agent's rights in the Collateral, this Agreement, the
other Financing Agreements and all other documents related hereto or
thereto, including any amendments, supplements or consents which may
hereafter be contemplated (whether or not executed) or entered into in
respect hereof and thereof, including: (a) all costs and expenses of filing
or recording (including Uniform Commercial Code and PPSA financing
statement filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) all costs and
expenses and fees for insurance premiums, appraisal fees and search fees,
costs and expenses of remitting loan proceeds, collecting checks and other
items of payment, and establishing and maintaining the Depository Accounts
and Concentration Account, together with Agent's customary charges and fees
with respect thereto; (c) charges, fees or expenses charged by any bank or
issuer in connection with the Letter of Credit Accommodations; (d) costs
and expenses of preserving and protecting the Collateral; (e) costs and
expenses paid or incurred in connection with obtaining payment of the
Obligations, enforcing the security interests and liens of Agent, selling
or otherwise realizing upon the Collateral, and otherwise enforcing the
provisions of this Agreement and the other Financing Agreements or
defending any claims made or threatened against Agent or any Lender arising
out of the transactions contemplated hereby and thereby (including
preparations for and consultations concerning any such matters); (f) all
out-of-pocket expenses, costs and customary administrative charges
heretofore and from time to time hereafter incurred by Agent during the
course of periodic field examinations of the Collateral and Borrower's or
any Restricted Subsidiary's operations, plus, during the existence of an
Event of Default, a per diem charge at the rate of $750 per person per day
for Agent's examiners in the field and office provided, that so long as no
Trigger Event exists, Agent has the right to elect to perform periodic
field examinations pursuant to Section 7.7 hereof three times in any fiscal
year of Borrower (excluding any examinations done prior to the date
hereof); and (g) the fees and disbursements of counsel (including legal
assistants) to Agent and Lenders in connection with any of the foregoing;
provided that no such fees and disbursements of counsel (including legal
assistants) to any Lender (unless acting in the capacity as "Agent"
hereunder) shall be payable by Borrower unless (i) an Event of Default
exists, (ii) pursuant to clause (c) above or (iii) in defense of claims
made or threatened pursuant to clause (e) above.
9.21 Applications under CCAA. Borrower acknowledges that its and each
Restricted Subsidiary's business and financial relationships with Agent and
Lenders are unique from its relationship with any other of its creditors.
Borrower agrees that it shall not file or permit any other Credit Party to
file any plan of arrangement under the Companies' Creditors Arrangement Act
(Canada) ("CCAA Plan") which provides for, or would permit directly or
indirectly, Agent or any Lender to be classified with any other creditor of
Borrower or any Restricted Subsidiary for the purposes of such CCAA Plan or
otherwise.
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9.22 Material Adverse Effect. If at any time, (a) any representation or
warranty set forth in this Agreement would be deemed to be false or
misleading in any material respect, (b) Borrower would be deemed to have
failed to perform any of the covenants set forth in this Agreement or (c)
any condition to the making of Loans set forth in Section 4.2 hereof would
not be deemed to be satisfied, in each case because a "Material Adverse
Effect," as set forth in such applicable provision but as defined below,
then exists, Borrower shall deliver to Agent a written description of such
Material Adverse Effect (as defined below) and the events or occurrences
relating thereto no later than five (5) days after any Credit Party knew or
should have known of the occurrence thereof. As used in this Section 9.22,
the term "Material Adverse Effect" shall mean a material adverse effect on
(a) the financial condition, business, performance or operations of any
Credit Party, or (b) the legality, validity or enforceability of this
Agreement or any of the other Financing Agreements; (c) the legality,
validity, enforceability, perfection or priority of the security interests
and liens of Agent upon the Collateral; (d) the Collateral or its value
taken as a whole; (e) the ability of Borrower to repay the Obligations or
of Borrower to perform its obligations under this Agreement or any of the
other Financing Agreements; (f) the ability of any Credit Party to perform
its obligations under any of the Financing Agreements to which it is a
party; or (g) the ability of Agent or any Lender to enforce the Obligations
or realize upon the Collateral or otherwise with respect to the material
rights and remedies of Agent and Lenders under this Agreement or any of the
other Financing Agreements.
9.23 Further Assurances. At the request of Agent at any time and from time
to time, Borrower shall, and shall cause each of its Restricted
Subsidiaries to, at their expense, duly execute and deliver, or cause to be
duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be
necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise
effectuate the provisions or purposes of this Agreement or any of the other
Financing Agreements. Agent may at any time and from time to time request a
certificate from an officer of Borrower representing that all conditions
precedent to the making of Loans and providing Letter of Credit
Accommodations contained herein are satisfied. In the event of such request
by Agent, Agent and Lenders may, at Agent's option, cease to make any
further Loans or provide any further Letter of Credit Accommodations until
Agent has received such certificate and, in addition, Agent has determined
that such conditions are satisfied. Where permitted by law, Borrower hereby
authorizes Agent to execute and file one or more UCC and PPSA financing
statements signed only by Agent or Agent's representative.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
------------------------------
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) Borrower or any Obligor fails to pay when due any of the
Obligations;
(b) any representation, warranty or statement of fact made by
Borrower or any Obligor to Agent or any Lender in this Agreement, the other
Financing Agreements or any other written agreement, schedule, confirmatory
assignment or otherwise shall when made or deemed made be false or
misleading in any material respect;
(c) (i) a default shall be made in the due observance, performance or
compliance with any term, covenant, condition or provision set forth in
Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.15, 9.16, 9.17, 9.18, 9.19,
9.21 or 9.22 of this Agreement, (ii) a default shall be made in the due
performance or compliance with any term, covenant, condition or provision
set forth in Sections 9.2, 9.5 or 9.6 of this Agreement and such default
under this clause (ii) shall continue unremedied for a period of 10 days
following the earlier to occur of a written notice thereof from Agent or
the date Borrower or any Restricted Subsidiary knew or should have known of
such default and/or (iii) a default shall be made in the due performance or
compliance with any term, covenant, condition or provision set forth in any
Financing Agreement (other than those specified in Sections 10.1(a), (b),
(c)(i) and (c)(ii) above) and such default under this clause (iii) shall
continue unremedied for a period of 30 days following the earlier to occur
of written notice thereof from Agent or the date any Credit Party knew or
should have known of such default.
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(d) any judgment for the payment of money is rendered against (i)
Parent in excess of $2,500,000 in any one case or in excess of $5,000,000
in the aggregate with all other outstanding judgments and/or (ii) Borrower
or any Restricted Party in excess of $1,000,000 in any one case or in
excess of $2,500,000 in the aggregate with all other outstanding judgments
and in each case shall remain undischarged or unvacated for a period in
excess of thirty (30) days or execution shall at any time not be
effectively stayed, or any judgment other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against
Borrower or any Obligor (other than Parent) or any of their assets that is
not effectively stayed;
(e) Borrower or any Obligor dissolves or suspends or discontinues
doing business unless permitted by Section 9.7(c);
(f) Borrower or any Obligor (with assets having a net book value of
at least $100,000) becomes insolvent (however defined or evidenced) makes an
assignment for the benefit of creditors, makes or sends notice of a bulk
transfer or sale or calls a meeting of its principal creditors;
(g) a petition, case or proceeding under the bankruptcy laws of
Canada or the United States of America or similar laws of any foreign
jurisdiction now or hereafter in effect or under any insolvency,
arrangement, reorganization, moratorium, receivership, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction now or
hereafter in effect (whether at law or in equity) is filed or commenced
against Borrower or any Obligor or all or any part of its properties and
such petition or application is not dismissed within thirty (30) days after
the date of its filing or Borrower or any Obligor shall file any answer
admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding
or the relief requested is granted sooner;
(h) a petition, case or proceeding under the bankruptcy laws of
Canada or the United States of America or similar laws of any foreign
jurisdiction now or hereafter in effect or under any insolvency,
arrangement, reorganization, moratorium, receivership, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction now or
hereafter in effect (whether at a law or equity) is filed or commenced by
Borrower or any Obligor or for all or any part of its property including,
without limitation, if any Credit Party shall: (i) apply for or consent to
the appointment of a receiver, trustee or liquidator of it or of all or a
substantial part of its property and assets; (ii) be unable, or admit in
writing its inability, to pay its debts as they mature, or commit any other
act of bankruptcy; (iii) take advantage of any insolvency or other similar
law pertaining to arrangements, moratoriums, compromises or
reorganizations, or admit the material allegations of a petition or
application filed in respect of it in any bankruptcy, reorganization or
insolvency proceeding; or (iv) take any corporate action for the purpose of
effecting any of the foregoing; or
(i) (i) any default by Parent under any Bond Document, (ii) any
payment default by Borrower or any Restricted Subsidiary under any
agreement, document or instrument relating to any Indebtedness for borrowed
money owing to any person other than Agent or any Lender (in such
capacity), or any obligations under Capital Leases, contingent Indebtedness
in connection with any guarantee, letter of credit, indemnity or similar
type of instrument in favor of any person other than Agent or any Lender
(in such capacity), in any case in an amount in excess of $1,000,000, which
default continues for more than the applicable cure period, if any, with
respect thereto, (iii) any non-payment default by Borrower or any
Restricted Subsidiary under any agreement, document or instrument relating
to any Indebtedness for borrowed money owing to any person other than Agent
or any Lender (in such capacity), or any obligations under Capital Leases,
contingent Indebtedness in connection with any guarantee, letter of credit,
indemnity or similar type of instrument in favor of any person other than
Agent or any Lender (in such capacity), in any case in an amount in excess
of $2,500,000, which default continues for more than the applicable cure
period, if any, with respect thereto or (iv) any default by Borrower or any
Restricted Subsidiary under any Material Contract if the effect of any such
default under this clause (iv) is to cause the obligations or liabilities
under such Material Contract to become due prior to its stated maturity or
cause any other party to any such Material Contract to commence enforcement
proceedings against Borrower or any Restricted Subsidiary and, in each case
under this clause (iv) if the effect thereof would cause a Material Adverse
Effect;
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(j) an ERISA Event shall occur which results in or could reasonably
be expected to result in liability of Borrower or any Obligor in an aggregate
amount in excess of $1,000,000 or any other event or condition exists with
respect to a Plan or Multiemployer Plan or with respect to any ERISA
Affiliate that could reasonably be expected to result in liability of
Borrower or any Obligor in an amount in excess of $1,000,000;
(k) any Change of Control;
(l) the indictment of Borrower or any Restricted Subsidiary under any
criminal statute, or commencement of criminal or civil proceedings against
Borrower or any Restricted Subsidiary, pursuant to which statute or
proceedings the penalties or remedies sought or available include
forfeiture of the property of Borrower or such Obligor; or
(m) a requirement from the Minister of National Revenue for payment
pursuant to Section 224 or any successor section of the Income Tax Act
(Canada) or Section 317, or any successor section or any other Person in
respect of any Canadian Guarantor of the Excise Tax Act (Canada) or any
comparable provision of similar legislation shall have been received by
Agent or any other Person in respect of any Canadian Guarantor or otherwise
issued in respect of any Canadian Guarantor in connection with any tax
claim against any Canadian Guarantor in the amount of at least $1,000,000.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Agent and Lenders shall have all rights and remedies provided
in this Agreement, the other Financing Agreements, the UCC, the PPSA and
other applicable law, all of which rights and remedies may be exercised
without notice to or consent by Borrower or any Obligor, except as such
notice or consent is expressly provided for hereunder or required by
applicable law. All rights, remedies and powers granted to Agent and
Lenders hereunder, under any of the other Financing Agreements, the UCC,
the PPSA or other applicable law, are cumulative, not exclusive and
enforceable, in Agent's discretion, alternatively, successively, or
concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by Borrower of this Agreement or any
of the other Financing Agreements. Subject to Section 12 hereof, Agent may,
and at the direction of the Required Lenders shall, at any time or times,
proceed directly against Borrower or any Obligor to collect the Obligations
without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Agent may, in its discretion, and
upon the direction of the Required Lenders, shall (i) accelerate the
payment of any or all Obligations and demand immediate payment thereof to
Agent for itself and the ratable benefit of Lenders, (provided, that, upon
the occurrence of any Event of Default described in Sections 10.1(g) and
10.1(h), all Obligations shall automatically become immediately due and
payable), (ii) with or without judicial process or the aid or assistance of
others, enter upon any premises on or in which any of the Collateral may be
located and take possession of the Collateral or complete processing,
manufacturing and repair of all or any portion of the Collateral, (iii)
require Borrower or any Obligor, at Borrower's expense, to assemble and
make available to Agent any part or all of the Collateral at any place and
time designated by Agent, (iv) collect, foreclose, receive, appropriate,
setoff and realize upon any and all Collateral, (v) remove any or all of
the Collateral from any premises on or in which the same may be located for
the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including entering into
contracts with respect thereto, public or private sales at any exchange,
broker's board, at any office of Agent or elsewhere) at such prices or
terms as Agent may deem reasonable, for cash, upon credit or for future
delivery, with the Agent having the right to purchase the whole or any part
of the Collateral at any such public sale, all of the foregoing being free
from any right or equity of redemption of Borrower, which right or equity
of redemption is hereby expressly waived and released by Borrower and/or
(vii) terminate this Agreement. If any of the Collateral is sold or leased
by Agent upon credit terms or for future delivery, the Obligations shall
not be reduced as a result thereof until payment therefor is finally
collected by Agent. If notice of disposition of Collateral is required by
law, ten (10) days prior notice by Agent to Borrower designating the time
and place of any public sale or the time after which any private sale or
other intended disposition of Collateral is to be made, shall be deemed to
be reasonable notice thereof and Borrower waive any other notice. In the
event Agent institutes an action to recover any Collateral or seeks
recovery of any Collateral by way of prejudgment remedy, Borrower waives
the posting of any bond which might otherwise be required.
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(c) For the purpose of enabling Agent to exercise the rights and
remedies hereunder, Borrower hereby grants to Agent, and shall cause each
of its Restricted Subsidiaries to grant to Agent, to the extent assignable,
an irrevocable, non-exclusive license (exercisable at any time an Event of
Default shall exist or have occurred and for so long as the same is
continuing) without payment of royalty or other compensation to Borrower or
any Restricted Subsidiary, to use, assign, license or sublicense any of the
trademarks, service-marks, trade names, business names, trade styles,
designs, logos and other source of business identifiers and other
Intellectual Property and general intangibles now owned or hereafter
acquired by Borrower or any of its Restricted Subsidiaries, wherever the
same maybe located, including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to
all computer programs used for the compilation or printout thereof,
provided, that, such license shall terminate on the date that Agent and
Lenders have received final payment and satisfaction in full of all of the
Obligations in immediately available funds and this Agreement has been
terminated.
(d) Without limiting the foregoing, upon the occurrence of an Event
of Default or an act, condition or event which with notice or passage of time
or both would constitute an Event of Default, Agent and Lenders may, at
Agent's option, and upon the direction of the Required Lenders, Agent and
Lenders shall, without notice, (i) cease making Revolving Loans or
arranging for Letter of Credit Accommodations or reduce the lending
formulas or amounts of Revolving Loans and Letter of Credit Accommodations
available to Borrower and/or (ii) terminate any provision of this Agreement
providing for any future Revolving Loans or Letter of Credit Accommodations
to be made by Agent and Lenders to Borrower.
(e) Upon the occurrence of an Event of Default, Agent may appoint,
remove and reappoint any person or persons, including an employee or agent of
Agent to be a receiver (the "Receiver") which term shall include a receiver
and manager of, or agent for, all or any part of the Collateral. Any such
Receiver shall, as far as concerns responsibility for his acts, be deemed
to be the agent of Borrower and not of Agent, and Agent shall not in any
way be responsible for any misconduct, negligence or non-feasance of such
Receiver, its employees or agents. Except as otherwise directed by Agent,
all money received by such Receiver shall be received in trust for and paid
to Agent. Such Receiver shall have all of the powers and rights of Agent
described in this Section 10. Agent may, either directly or through its
agents or nominees, exercise any or all powers and rights of a Receiver.
(f) Borrower shall pay all costs, charges and expenses incurred by
Agent or any Receiver or any nominee or agent of Agent or any Receiver, whether
directly or for services rendered (including, without limitation,
solicitor's costs on a solicitor and his own client basis, auditor's costs,
other legal expenses and Receiver remuneration) in enforcing this Agreement
or any other Financing Agreement and in enforcing or collecting Obligations
and all such expenses together with any money owing as a result of any
borrowing permitted hereby shall be a charge on the proceeds of realization
and shall be secured hereby.
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SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
------------------------------------------------------------
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Agreement
and the other Financing Agreements (unless otherwise indicated therein) and
any dispute arising out of the relationship between the parties hereto,
whether in contract, tort, equity or otherwise, shall be governed by the
internal laws of the State of Illinois (without giving effect to principles
of conflicts of law).
(b) Borrower, Agent and Lenders irrevocably consent and submit to the
non-exclusive jurisdiction of the Circuit Court of the State of Illinois in
Xxxx County and the United States District Court for the Northern District
of Illinois, whichever Agent may elect, and waive any objection based on
venue or forum non conveniens with respect to any action instituted therein
arising under this Agreement or any of the other Financing Agreements or in
any way connected with or related or incidental to the dealings of the
parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case
whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that
Agent and Lenders shall have the right to bring any action or proceeding
against Borrower or any Obligor or its or their property in the courts of
any other jurisdiction which Agent deems necessary or appropriate in order
to realize on the Collateral or to otherwise enforce its rights against
Borrower or any Obligor or its or their property).
(c) Borrower hereby waives personal service of any and all process
upon it and consents that all such service of process may be made by certified
mail (return receipt requested) directed to its address set forth on the
signature page hereof 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
or, at Agent's option, by service upon Borrower in any other manner
provided under the rules of any such courts. Within thirty (30) days after
such service, Borrower shall appear in answer to such process, failing
which Borrower shall be deemed in default and judgment may be entered by
Agent against Borrower for the amount of the claim and other relief
requested.
(d) BORROWER, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
EQUITY OR OTHERWISE. BORROWER, AGENT AND LENDERS EACH HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER, AGENT OR ANY
LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Agent and Lenders shall not have any liability to Borrower
(whether in tort, contract, equity or otherwise) for losses suffered by
Borrower in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by
a final and non-appealable judgment or court order binding on Agent and such
Lender, that the losses were the result of acts or omissions constituting
gross negligence or willful misconduct. In any such litigation, Agent and
Lenders shall be entitled to the benefit of the rebuttable presumption that
it acted in good faith and with the exercise of ordinary care in the
performance by it of the terms of this Agreement.
11.2 Waiver of Notices. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with
respect to any and all instruments and chattel paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, except such as are
expressly provided for herein. No notice to or demand on Borrower which
Agent or any Lender may elect to give shall entitle Borrower to any other
or further notice or demand in the same, similar or other circumstances.
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11.3 Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by Agent, no
amendment, modification, termination or waiver of any provision of this
Agreement or any other Financing Agreement, or any consent to any departure
by Borrower therefrom, shall in any event be effective unless the same
shall be in writing and signed by Agent and Borrower, and by Required
Lenders or all affected Lenders, as applicable. Except as set forth in
clauses (b) and (c) below, all such amendments, modifications, terminations
or waivers requiring the consent of any Lenders shall require the written
consent of Required Lenders.
(b) No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement that (i) increases the
percentage advance rates set forth in the definition of "Borrowing Base",
makes less restrictive the nondiscretionary criteria for exclusion from
"Eligible Accounts" and "Eligible Inventory" set forth in the definitions
of such terms, or (iii) amends Section 12.8 hereof shall be effective
unless the same shall be in writing and signed by Agent, Required Lenders
and Borrower. No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement that waives
compliance with the conditions precedent set forth in Section 4.2 to the
making of any Revolving Loan or the incurrence of any Letter of Credit
Accommodation shall be effective unless the same shall be in writing and
signed by Agent, Required Lenders and Borrower. Notwithstanding anything
contained in this Agreement to the contrary, no waiver or consent with
respect to any Event of Default shall be effective for purposes of the
conditions precedent to the making of Revolving Loans or the incurrence of
Letter of Credit Accommodations set forth in Section 4.2 unless the same
shall be in writing and signed by Agent, Required Lenders and Borrower.
(c) No amendment, modification, termination or waiver shall, unless
in writing and signed by Agent and each Lender directly affected thereby: (i)
increase the principal amount of any Lender's Commitment over the amount
then in effect; (ii) reduce the principal of, rate of interest on or fees
payable with respect to any Loan or Letter of Credit Accommodations of any
affected Lender; (iii) extend any scheduled payment date or final maturity
date of the principal amount of any Loan of any affected Lender; (iv)
waive, forgive, defer, extend or postpone any payment of interest or fees
as to any affected Lender; (v) release any Obligor except as otherwise
permitted herein (which action shall be deemed to directly affect all
Lenders); (vi) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans that shall be required for Lenders or
any of them to take any action hereunder; (vii) amend or waive this Section
11.3 or the definition of the term "Required Lenders" insofar as such
definition affects the substance of this Section 11.3; and (viii) permit
the assignment or transfer by Borrower of any of its right and obligations
hereunder (which action shall be deemed to directly affect all Lenders).
(d) No amendment, modification, termination or waiver shall, unless
otherwise permitted by this Agreement or unless consented to in writing and
signed by Agent and the Required Lenders, release, or permit Borrower or
any Obligor to sell or otherwise dispose of, any Collateral.
(e) Agent and Lenders shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its or their
rights, powers and/or remedies unless such waiver shall be in writing and
signed as provided herein. Any such waiver shall be enforceable only to the
extent specifically set forth therein. A waiver by Agent or any Lender of any
right, power and/or remedy on any one occasion shall not be construed as a
bar to or waiver of any such right, power and/or remedy which Agent or any
Lender would otherwise have on any future occasion, whether similar in kind
or otherwise.
(f) The consent of Agent shall be required for any amendment, waiver
or consent affecting the rights or duties of Agent hereunder or under any of
the other Financing Agreements, in addition to the consent of the Lenders
otherwise required by this Section.
11.4 Waiver of Counterclaims. Borrower waives all rights to interpose any
claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom
or relating hereto or thereto. Notwithstanding any provision herein to the
contrary, nothing shall prevent the assertion of any claim by Borrower by
separate action, suit or compulsory counterclaim or shall constitute a
waiver by Borrower of any such claim or right.
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11.5 Indemnification. Borrower shall indemnify and hold Agent and each
Lender, and its directors, agents, employees and counsel, harmless from and
against any and all losses, claims, damages, liabilities, costs or expenses
imposed on, incurred by or asserted against any of them in connection with
any litigation, investigation, claim or proceeding commenced or threatened
related to the negotiation, preparation, execution, delivery, enforcement,
performance or administration of this Agreement, any other Financing
Agreements, or any undertaking or proceeding related to any of the
transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including amounts paid in settlement, court
costs, and the fees and expenses of counsel unless it is determined that
any such losses, claims, damages, liabilities, costs or expenses were the
result of acts or omissions by Agent, any Lender or any of their directors,
agents, employees or counsel which constituted gross negligence or willful
misconduct. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section may be unenforceable because it violates
any law or public policy, Borrower shall pay the maximum portion which it
is permitted to pay under applicable law to Agent and Lenders in
satisfaction of indemnified matters under this Section. The foregoing
indemnity shall survive the payment of the Obligations and the termination
or non-renewal of this Agreement.
SECTION 12. THE AGENT
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12.1 Appointment, Powers and Immunities. Each Lender irrevocably
designates, appoints and authorizes Congress to act as Agent hereunder and
under the other Financing Agreements with such powers as are specifically
delegated to Agent by the terms of this Agreement and of the other
Financing Agreements, together with such other powers as are reasonably
incidental thereto. Agent (a) shall have no duties or responsibilities
except those expressly set forth in this Agreement and in the other
Financing Agreements, and shall not by reason of this Agreement or any
other Financing Agreement be a trustee or fiduciary for any Agent; (b)
shall not be responsible to Lenders for any recitals, statements,
representations or warranties contained in this Agreement or in any of the
other Financing Agreements, or in any certificate or other document
referred to or provided for in, or received by any of them under, this
Agreement or any other Financing Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement
or any other Financing Agreement or any other document referred to or
provided for herein or therein or for any failure by Borrower or any
Obligor or any other Person to perform any of its obligations hereunder or
thereunder; and (c) shall not be responsible to Lenders for any action
taken or omitted to be taken by it hereunder or under any other Financing
Agreement or under any other document or instrument referred to or provided
for herein or therein or in connection herewith or therewith, except for
its own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. Agent may
employ agents and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected
by it in good faith. Agent may deem and treat the payee of any note as the
holder thereof for all purposes hereof unless and until the assignment
thereof pursuant to an agreement (if and to the extent permitted herein) in
form and substance satisfactory to Agent shall have been delivered to and
acknowledged by Agent.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper
Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by Agent. As to any
matters not expressly provided for by this Agreement or any other Financing
Agreement, Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or thereunder in accordance with
instructions given by the Required Lenders or all Lenders as is required in
such circumstance, and such instructions of such Agents and any action
taken or failure to act pursuant thereto shall be binding on all Lenders.
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12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of an Event of Default or other failure of a condition precedent
to the Loans and Letter of Credit Accommodations hereunder, unless and
until Agent has received written notice from a Lender, or Borrower
specifying such Event of Default or any unfulfilled condition precedent,
and stating that such notice is a "Notice of Default or Failure of
Condition". In the event that Agent receives such a Notice of Default or
Failure of Condition, Agent shall give prompt notice thereof to the
Lenders. Agent shall (subject to Section 12.7) take such action with
respect to any such Event of Default or failure of condition precedent as
shall be directed by the Required Lenders; provided, that, unless and until
Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to or by reason of such Event of Default or failure of condition
precedent, as it shall deem advisable in the best interest of Lenders.
Without limiting the foregoing, and notwithstanding the existence or
occurrence and continuance of an Event of Default or any other failure to
satisfy any of the conditions precedent set forth in Section 4 of this
Agreement to the contrary, Agent may, but shall have no obligation to,
continue to make Revolving Loans and issue or cause to be issued Letter of
Credit Accommodations for the ratable account and risk of Lenders from time
to time if Agent believes making such Revolving Loans or issuing or causing
to be issued such Letter of Credit Accommodations is in the best interests
of Lenders.
(b) Except with the prior written consent of Agent, no Lender may
assert or exercise any enforcement right or remedy in respect of the Loans,
Letter of Credit Accommodations or other Obligations, as against Borrower
or any Obligor or any of the Collateral or other property of Borrower or
any Obligor.
12.4 Congress in its Individual Capacity. With respect to any Commitment
it may make and any Loans made and Letter of Credit Accommodations issued or
caused to be issued by it (and any successor acting as Agent), if and to
the extent that Congress shall be a Lender hereunder, it shall have the
same rights and powers hereunder as any other Lender and may exercise the
same as though it were not acting as Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include Congress
in its individual capacity as Lender hereunder. Congress (and any successor
acting as Agent) and its Affiliates may (without having to account therefor
to any Lender) lend money to, make investments in and generally engage in
any kind of business with Borrower (and any of its Restricted Subsidiaries
or Affiliates) as if it were not acting as Agent, and Congress and its
Affiliates may accept fees and other consideration from Borrower and any of
its Restricted Subsidiaries and Affiliates for services in connection with
this Agreement or otherwise without having to account for the same to
Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Borrower hereunder and without limiting any obligations of
Borrower hereunder) ratably, in accordance with their Pro Rata Shares, for
any and all claims of any kind and nature whatsoever that may be imposed
on, incurred by or asserted against Agent (including by any Lender) arising
out of or by reason of any investigation in or in any way relating to or
arising out of this Agreement or any other Financing Agreement or any other
documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including the costs and
expenses that Agent is obligated to pay hereunder) or the enforcement of
any of the terms hereof or thereof or of any such other documents,
provided, that, no Lender shall be liable for any of the foregoing to the
extent it arises from the gross negligence or willful misconduct of the
party to be indemnified as determined by a final non-appealable judgment of
a court of competent jurisdiction.
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12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that it
has, independently and without reliance on Agent or other Lender, and based
on such documents and information as it has deemed appropriate, made its
own credit analysis of Borrower and Obligors and has made its own decision
to enter into this Agreement and that it will, independently and without
reliance upon Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this
Agreement or any of the other Financing Agreements. Agent shall not be
required to keep itself informed as to the performance or observance by
Borrower or any Obligor of any term or provision of this Agreement or any
of the other Financing Agreements or any other document referred to or
provided for herein or therein or to inspect the properties or books of
Borrower or any Obligor. Agent will use reasonable efforts to provide
Lenders with any information received by Agent from Borrower or any Obligor
which is required to be provided to Lenders hereunder and with a copy of
any Notice of Default or Failure of Condition received by Agent from
Borrower or any Lender; provided, that, Agent shall not be liable to any
Lender for any failure to do so, except to the extent that such failure is
attributable to Agent's own gross negligence or willful misconduct as
determined by a final non-appealable judgment of a court of competent
jurisdiction. Except for notices, reports and other documents expressly
required to be furnished to Lenders by Agent hereunder, Agent shall not
have any duty or responsibility to provide any Lender with any other credit
or other information concerning the affairs, financial condition or
business of Borrower or any Obligor that may come into the possession of
Agent.
12.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all
cases be fully justified in failing or refusing to act hereunder and
thereunder unless it shall receive further assurances to its satisfaction
from Lenders of their indemnification obligations under Section 12.5 hereof
against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action.
12.8 Additional Loans. Agent shall not make any Revolving Loans or provide
any Letter of Credit Accommodations to Borrower on behalf of Lenders
intentionally and with actual knowledge that such Revolving Loans or Letter
of Credit Accommodations would cause the aggregate amount of the total
outstanding Revolving Loans and Letter of Credit Accommodations to Borrower
to exceed the Borrowing Base of Borrower, without the prior consent of all
Lenders, except, that, Agent may make such additional Revolving Loans or
provide such additional Letter of Credit Accommodations on behalf of
Lenders, intentionally and with actual knowledge that such Loans or Letter
of Credit Accommodations will cause the total outstanding Revolving Loans
and Letter of Credit Accommodations to Borrower to exceed the Borrowing
Base, as Agent may deem necessary or advisable in its discretion, provided,
that: (a) the total principal amount of the additional Revolving Loans or
additional Letter of Credit Accommodations to Borrower which Agent may make
or provide after obtaining such actual knowledge that the aggregate
principal amount of the Revolving Loans equal or exceed the Borrowing Base
shall not exceed the amount equal to $11,000,000 outstanding at any time
less the then outstanding amount of any Special Agent Advances and shall
not cause the total principal amount of the Revolving Loans and Letter of
Credit Accommodations to exceed the Maximum Credit and (b) without the
consent of all Lenders, Agent shall not make any such additional Revolving
Loans or Letter of Credit Accommodations more than sixty (60) days from the
date of the first such additional Revolving Loans or Letter of Credit
Accommodations. Each Lender shall be obligated to pay Agent the amount of
its Pro Rata Share of any such additional Revolving Loans or Letter of
Credit Accommodations provided that Agent is acting in accordance with the
terms of this Section 12.8.
12.9 Concerning the Collateral and the Related Financing Agreements. Each
Lender authorizes and directs Agent to enter into this Agreement and the
other Financing Agreements. Each Lender agrees that any action taken by
Agent or Required Lenders or all Lenders in accordance with the terms of
this Agreement or the other Financing Agreements and the exercise by Agent
or any category of 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.
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12.10 Field Audit, Examination Reports and other Information; Disclaimer
by Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report and a weekly report with respect to the Borrowing Base prepared by
Agent (each field audit or examination report and weekly report with
respect to the Borrowing Base being referred to herein as a "Report" and
collectively, "Reports") and Borrower hereby consents to the distribution
of such Reports;
(b) expressly agrees and acknowledges that Agent (A) does not make
any representation or warranty as to the accuracy of any Report, or (B) shall
not be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or any other party
performing any audit or examination will inspect only specific information
regarding Borrower and the Restricted Subsidiaries and will rely
significantly upon Borrower's and the Restricted Subsidiaries' books and
records, as well as on representations of Borrower's and the Restricted
Subsidiaries' personnel; and
(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.
12.11 Collateral Matters.
(a) Agent may, at its option, from time to time, at any time on or
after an Event of Default and for so long as the same is continuing or upon any
other failure of a condition precedent to the Revolving Loans and Letter of
Credit Accommodations hereunder, make such disbursements and advances
("Special Agent Advances") which Agent, in its sole discretion, deems
necessary or desirable either (i) to preserve or protect the Collateral or
any portion thereof (provided that in no event shall Special Agent Advances
for such purpose exceed the amount equal to $11,000,000 in the aggregate
outstanding at any time less the then outstanding Revolving Loans under
Section 12.8 hereof) or (ii) to pay any other amount chargeable to Borrower
pursuant to the terms of this Agreement or any of the other Financing
Agreements consisting of costs, fees and expenses and payments to any
issuer of Letter of Credit Accommodations. Special Agent Advances shall be
repayable on demand and be secured by the Collateral. Special Agent
Advances shall not constitute Loans but shall otherwise constitute
Obligations hereunder. Agent shall notify each Lender and Borrower in
writing of each such Special Agent Advance, which notice shall include a
description of the purpose of such Special Agent Advance. Without
limitation of its obligations pursuant to Section 6.9, each Lender agrees
that it shall make available to Agent, upon Agent's demand, in immediately
available funds, the amount equal to such Lender's Pro Rata Share of each
such Special Agent Advance. If such funds are not made available to Agent
by such Lender, Agent shall be entitled to recover such funds, on demand
from such Lender together with interest thereon for each day from the date
such payment was due until the date such amount is paid to Agent at the
Federal Funds Rate for each day during such period (as published by the
Federal Reserve Bank of New York or at Agent's option based on the
arithmetic mean determined by 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 the three leading brokers of Federal funds
transactions in New York City selected by Agent) and if such amounts are
not paid within three (3) days of Agent's demand, at the highest Interest
Rate provided for in Section 3.1 hereof applicable to Prime Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, to release any
security interest in, mortgage or lien upon, any of the Collateral (i) upon
termination of the Commitments and payment and satisfaction of all of the
Obligations and delivery of cash collateral to the extent required under
Section 13.1 below, or (ii) constituting property being sold or disposed of
if Borrower certifies to Agent and Agent that the sale or disposition is
made in compliance with Section 9.7 hereof (and Agent may rely conclusively
on any such certificate, without further inquiry), or (iii) constituting
property in which Borrower or any Obligor did not own an interest at the
time the security interest, mortgage or lien was granted or at any time
thereafter, or (iv) if approved, authorized or ratified in writing by the
applicable Lenders pursuant to Section 11.3(d) hereof. Except as provided
above, Agent will not release any security interest in, mortgage or lien
upon, any of the Collateral without the prior written authorization of all
the applicable Lenders pursuant to Section 11.3(d) hereof.
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(c) Without any manner limiting Agent's authority to act without any
specific or further authorization or consent by the Lenders, each Lender
agrees to confirm in writing, upon request by Agent, the authority to
release Collateral conferred upon Agent under this Section and in Section
11.3(d) hereof. Agent shall (and is hereby irrevocably authorized by
Lenders to) execute such documents as may be necessary to evidence the
release of the security interest, mortgage or liens granted to Agent upon
any Collateral to the extent set forth above and in Section 11.3(d) hereof;
provided, that, (i) Agent shall not be required to execute any such
document on terms which, in Agent's opinion, would expose Agent to
liability or create any obligations or entail any consequence other than
the release of such security interest, mortgage or liens without recourse
or warranty and (ii) such release shall not in any manner discharge, affect
or impair the Obligations or any security interest, mortgage or lien upon
(or obligations of Borrower or any Obligor in respect of) the Collateral
retained by Borrower or such Obligor.
(d) Agent shall have no obligation whatsoever to any Lender or any
other Person to investigate, confirm or assure that the Collateral exists or is
owned by Borrower or any Obligor or is cared for, protected or insured or
has been encumbered, or that any particular items of Collateral meet the
eligibility criteria applicable in respect of the Loans or Letter of Credit
Accommodations hereunder, or whether any particular reserves are
appropriate, or that the liens and security interests granted to Agent
pursuant hereto or any of the Financing Agreements or otherwise 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 Agent in this Agreement or in any of the
other Financing Agreements, it being understood and agreed that in respect
of the Collateral, or any act, omission or event related thereto, Agent may
act in any manner it may deem appropriate, in its discretion, given Agent's
own interest in the Collateral as a Lender and that Agent shall have no
duty or liability whatsoever to any other Lender.
12.12 Agency for Perfection. Each Lender hereby appoints Agent and each
other Lender as agent and bailee for the purpose of perfecting the security
interests in and liens upon the Collateral of Agent in assets which, in
accordance with the PPSA and Article 9 of the UCC can be perfected only by
possession (or where the security interest of a secured party with
possession has priority over the security interest of another secured
party) and Agent and each Lender hereby acknowledges that it holds
possession of any such Collateral for the benefit of Agent as secured
party. Should any Lender obtain possession of any such Collateral, such
Lender shall notify Agent thereof, and, promptly upon Agent's request
therefor shall deliver such Collateral to Agent or in accordance with
Agent's instructions.
12.13 Successor Agent. Agent may resign at any time by giving not less than
30 days' prior written notice thereof to Lenders and Borrower. Upon any
such resignation, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days
after the resigning Agent's giving notice of resignation, then the
resigning Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a
subsidiary of a commercial bank or financial institution if such commercial
bank or financial institution is organized under the laws of the United
States of America or of any State thereof and has a combined capital and
surplus of at least $300,000,000. If no successor Agent has been appointed
pursuant to the foregoing, within 30 days after the date such notice of
resignation was given by the resigning Agent, such resignation shall become
effective and the Required Lenders shall thereafter perform all the duties
of Agent hereunder until such time, if any, as the Required Lenders appoint
a successor Agent as provided above. Any successor Agent appointed by
Required Lenders hereunder shall be subject to the approval of Borrower,
such approval not to be unreasonably withheld or delayed; provided that
such approval shall not be required if an Event of Default has occurred and
is continuing. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall succeed to and become vested
with all the rights, powers, privileges and duties of the resigning Agent.
Upon the earlier of the acceptance of any appointment as Agent hereunder by
a successor Agent or the effective date of the resigning Agent's
resignation, the resigning Agent shall be discharged from its duties and
obligations under this Agreement and the other Financing Agreements, except
that any indemnity rights or other rights in favor of such resigning Agent
shall continue. After any resigning Agent's resignation hereunder, the
provisions of this Section 12 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was acting as Agent under this
Agreement and the other Loan Documents.
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SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
--------------------------------
13.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date five (5)
years from the date hereof (the "Maturity Date") and from year to year
thereafter, unless sooner terminated pursuant to the terms hereof. In
addition, Agent or the Required Lenders or Borrower may, at any time
terminate this Agreement and the other Financing Agreements effective on
the Maturity Date or on the anniversary of the Maturity Date in any year by
giving to the other parties at least sixty (60) days' prior written notice;
provided, that, this Agreement and all other Financing Agreements must be
terminated simultaneously. Upon the Maturity Date or any other effective
date of termination of the Financing Agreements, Borrower shall pay to
Agent all outstanding and unpaid Obligations and shall furnish cash
collateral to Agent in such amounts as Agent determines are reasonably
necessary to secure Agent from loss, cost, damage or expense, including
attorneys' fees and expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit
Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received
final and indefeasible payment. Such payments in respect of the Obligations
and cash collateral shall be remitted by wire transfer in Federal funds to
such bank account of Agent, as Agent may, in its discretion, designate in
writing to Borrower for such purpose. Interest shall be due until and
including the next Business Day, if the amounts so paid by Borrower to the
bank account designated by Agent are received in such bank account later
than 12:00 noon, Chicago time.
(b) No termination of this Agreement or the other Financing Agreements
shall relieve or discharge Borrower or any Obligor of their respective
duties, obligations and covenants under this Agreement or the other
Financing Agreements until all Obligations have been fully and finally
discharged and paid, and Agent's continuing security interest in the
Collateral and the rights and remedies of Agent hereunder, under the other
Financing Agreements and applicable law, shall remain in effect until all
such Obligations have been fully and finally discharged and paid.
Accordingly, Borrower waives any rights it may have under Section 9-404 of
the UCC (or any replacement section) and any similar provision under the
PPSA to demand the filing of termination statements with respect to the
Collateral and Agent shall not be required to send such termination
statements to Borrower, or to file them with any filing office, unless and
until this Agreement shall have been terminated in accordance with its
terms and all Obligations paid in full in immediately available funds.
(c) If for any reason this Agreement is terminated prior to the
Maturity Date or the end of the then current renewal term of this
Agreement, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Agent's and Lender's lost profits as a result
thereof, Borrower agrees to pay to Agent for itself and the ratable benefit
of Lenders, upon the effective date of such termination, an early
termination fee in the amount of (i) three-quarters of one percent (0.75%)
of the Maximum Credit if such termination is effective at any time from the
date hereof to and including the first anniversary of the date hereof, (ii)
one-half of one percent (0.5%) of the Maximum Credit if such termination is
effective at any time after the first anniversary of the date hereof to and
including the second anniversary of the date hereof or (iii) one-quarter of
one percent (0.25%) of the Maximum Credit if such termination is effective
at any time after the second anniversary of the date hereof to and
including the third anniversary of the date hereof. Such early termination
fee shall be presumed to be the amount of damages sustained by Agent and
Lenders as a result of such early termination and Borrower agrees that it
is reasonable under the circumstances currently existing. In addition,
Agent and Lenders shall be entitled to such early termination fee upon the
occurrence of any Event of Default described in Sections 10.1(g) and
10.1(h) hereof, even if Agent and Lenders do not exercise the right to
terminate this Agreement, but elect, at their option, to provide financing
to Borrower or permit the use of cash collateral under the United States
Bankruptcy Code, the Bankruptcy and Insolvency Act (Canada), the Companies'
Creditors Arrangement Act (Canada) or any similar legislation in any
jurisdiction. The early termination fee provided for in this Section 13.1
shall be deemed included in the Obligations.
(d) Notwithstanding anything to the contrary contained in Section
13.1(c) above, in the event of the termination of this Agreement by Borrower
prior to the Maturity Date and the full and final repayment of all of the
Obligations and the receipt by Agent and Lenders of cash collateral to
secure the Letter of Credit Accommodations with the proceeds of initial
loans and advances to Borrower pursuant to a revolving credit facility
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provided by First Union National Bank or its Affiliates to Borrower to
replace the financing arrangements provided for herein, Borrower shall not
be required to pay the early termination fee provided for in Section
13.1(c) above. In addition, if any credit facility is entered into by
Borrower with a lender or group of lenders to replace the financing
arrangements provided for herein within one hundred twenty (120) days after
the date hereof, Borrower shall not be required to pay the early
termination fee provided for in Section 13.1(c) above.
13.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1, Article 8 or
Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
(b) All references to the plural herein shall also mean the singular
and to the singular shall also mean the plural unless the context otherwise
requires.
(c) All references to Borrower, or any other Credit Party, Agent and
Lenders pursuant to the definitions set forth in the recitals hereto, or to
any other person herein, shall include their respective successors and
assigns.
(d) The words "hereof", "herein", "hereunder", "this Agreement" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean
"including, without limitation".
(f) An Event of Default shall exist or continue or be continuing until
such Event of Default is waived in accordance with Section 11.3 or is cured in
a manner satisfactory to Agent, if such Event of Default is capable of being
cured as determined by Agent.
(g) Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be
computed unless otherwise specifically provided herein, in accordance with
GAAP as consistently applied and using the same method for inventory
valuation as used in the preparation of the financial statements of
Borrower most recently received by Agent prior to the date hereof.
(h) 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".
(i) Unless otherwise expressly provided herein, (i) references herein
to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent
the same are not prohibited by the terms hereof or of any other Financing
Agreement, and (ii) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions
consolidating, amending, replacing, recodifying, supplementing or
interpreting the statute or regulation.
(j) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(k) This Agreement and other Financing Agreements 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.
(l) This Agreement and the other Financing Agreements are the result
of negotiations among and have been reviewed by counsel to Agent and the other
parties, and are the products of all parties. Accordingly, this Agreement
and the other Financing Agreements shall not be construed against Agent or
Lenders merely because of Agent's or any Lender's involvement in their
preparation.
(m) The term $ means lawful money of the United States of America.
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13.3 Notices. All notices, requests and demands hereunder shall be in
writing and deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. All notices,
requests and demands upon the parties are to be given to the following
addresses (or to such other address as any party may designate by notice in
accordance with this Section):
If to Borrower or any Obligor: JII, Inc.
Arbor Lake Centre
Suite 550
0000 Xxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to: Jordan Industries, Inc.
000 X. Xxxxxxxx Xxx.
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx XX
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and
Xxxxx, Xxxxx & Xxxxx
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and
Xxxxxx X. Xxxx
Sonnenschein, Nath & Xxxxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to Agent: Congress Financial Corporation
000 X. Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
13.4 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed
as though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be
construed and enforced only to such extent as shall be permitted by
applicable law.
13.5 Confidentiality
(a) Agent and each Lender shall use all reasonable efforts to keep
confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, the
"Information" (as defined below) and all copies thereof, extracts therefrom
and analysis or other material based thereon, provided, that, nothing
contained herein shall limit the disclosure of any such Information: (i) to
the extent required by statute, rule, regulation, subpoena or court order,
(ii) to bank examiners and other regulators, auditors and/or accountants,
(iii) in connection with any litigation to which Agent or Lender is a
party, (iv) to any assignee or participant (or prospective assignee or
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participant) so long as such assignee or participant (or prospective
assignee or participant) shall have first agreed in writing to treat such
information as confidential in accordance with this Section 13.5, or (v) to
counsel for Agent or any Lender or any participant or assignee (or
prospective participant or assignee). For purposes of this Section 13.5,
"Information" shall mean all non-public financial statements, certificates,
reports and information (including all analyses, compilations and studies
prepared by Agent or any Lender based on any of the foregoing) which are
received from any Credit Party which relates to any Credit Party, a
shareholder of any Credit Party or any of their Subsidiaries or any
employee, customer or supplier of Parent or any of its Subsidiaries, other
than which were available to Agent or any Lender on a non-confidential
basis prior to its Subsidiaries and which are, in the case of Information
provided after the date hereof, clearly identified at the time of delivery
as confidential.
(b) In no event shall this Section 13.5 or any other provision of
this Agreement or applicable law be deemed: (i) to apply to or restrict
disclosure of Information that has been or is made public by Borrower or
any third party without breach of this Section 13.5 or otherwise become
generally available to the public other than as a result of a disclosure in
violation hereof, (ii) to apply to or restrict disclosure of Information
that was or becomes available to Agent or any Lender on a non-confidential
basis from a person other than Borrower, (iii) require Agent or any Lender
to return any materials furnished by Borrower to Agent or any Lender or
(iv) prevent Agent or any Lender from responding to routine informational
requests in accordance with the Code of Ethics for the Exchange of Credit
Information promulgated by The Xxxxxx Xxxxxx Associates or other applicable
industry standards relating to the exchange of credit information. The
obligations of Agent and each Lender under this Section 13.5 shall
supersede and replace the obligations of Agent and each Lender under any
confidentiality letter signed prior to the date hereof.
13.6 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and
inure to the benefit of and be enforceable by Agent, Lenders, Borrower and
their respective successors and assigns, except that Borrower may not
assign its rights under this Agreement, the other Financing Agreements and
any other document referred to herein or therein without the prior written
consent of Agent and Lenders. Any such purported assignment without such
express prior written consent shall be void. No Lender may assign its
rights and obligations under this Agreement without the prior written
consent of Agent, except as provided in Section 13.7 below. The terms and
provisions of this Agreement and the other Financing Agreements are for the
purpose of defining the relative rights and obligations of Borrower, the
applicable Credit Parties, Agent and Lenders with respect to the
transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement or any
of the other Financing Agreements.
13.7 Assignments; Participations.
(a) Each Lender may (i) assign all or a portion of its rights and
obligations under this Agreement (including, without limitation, a portion
of its Commitments, the Loans owing to it and its rights and obligations as
a Lender with respect to Letters of Credit Accommodations) and the other
Financing Agreements to (A) its parent company and/or any Affiliate of such
Lender which is at least fifty (50%) percent owned by such Lender or its
parent company or (B) one or more Lenders or (C) any person (whether a
corporation, partnership, trust or otherwise) that is engaged in the
business of making, purchasing, holding or otherwise investing in bank
loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or with respect to any
Lender that is a fund which invests in bank loans and similar extensions of
credit, any other fund that invests in bank loans and similar extensions of
credit and is managed by the same investment advisor as such Lender or by
an Affiliate of such investment advisor or (ii) assign all or a portion of
its rights and obligations under this Agreement to one or more Eligible
Transferees, each of which assignees shall become a party to this Agreement
as a Lender by execution of an Assignment and Acceptance; provided, that,
(A) the consent of Agent shall be required in connection with any
assignment to an Eligible Transferee pursuant to clause (ii) above, (B) if
such Eligible Transferee is not a bank, Agent shall receive a
84
representation in writing by such Eligible Transferee that either (1) no
part of its acquisition of its Loans is made out of assets of any employee
benefit plan, or (2) after consultation, in good faith, with Borrower and
provision by Borrower of such information as may be reasonably requested by
such Eligible Transferee, the acquisition and holding of such Commitments
and Loans does not constitute a non-exempt prohibited transaction under
Section 406 of ERISA and Section 4975 of the Code, or (3) such assignment
is an "insurance company general account," as such term is defined in the
Department of Labor Prohibited Transaction Class Exemption 95.60 (issued
July 12, 1995) ("PTCE 95-60), and, as of the date of the assignment, there
is no "employee benefit plan" with respect to which the aggregate amount of
such general account's reserves and liabilities for the contracts held by
or on behalf of such "employee benefit plan" and all other "employee
benefit plans" maintained by the same employer (and affiliates thereof as
defined in Section V(a)(1) of PTCE 95-60) or by the same employee
organization (in each case determined in accordance with the provisions of
PTCE 95-60) exceeds ten (10%) percent of the total reserves and liabilities
of such general account (as determined under PTCE 95-60) (exclusive of
separate account liabilities) plus surplus as set forth in the National
Association of Insurance Commissioners Annual Statement filed with the
state of domicile of such Eligible Transferee and (C) such transfer or
assignment will not be effective until recorded by the Agent on the
Register. As used in this Section, the term "employee benefit plan" shall
have the meaning assigned to it in Title I of ERISA and shall also include
a "plan" as defined in Section 4975(e)(1) of the Code.
(b) Agent shall maintain a register of the names and addresses of
Lenders, their Commitments and the principal amount of their Loans (the
"Register"). Agent shall also maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and shall modify the Register to give
effect to each Assignment and Acceptance. The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and
Borrower, any Obligor, Agent and Lenders may treat each Person whose name
is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by Borrower and
any Lender at any reasonable time and from time to time upon reasonable
prior notice.
(c) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, (i) the
assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations (including, without limitation, the obligation to
participate in Letter of Credit Accommodations) of a Lender hereunder and
thereunder and (ii) the assigning Lender shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement. In the event that any Lender assigns or
otherwise transfers all or any part of the Obligations, Agent shall so
notify Borrower and Borrower shall, upon the request of the Agent, execute
new promissory notes in exchange for the promissory notes of such assigning
Lender, if any.
(d) By execution and delivery of an Assignment and Acceptance, the
assignor and assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (i) other than as provided in such Assignment
and Acceptance, the 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 any of the
other Financing Agreements or the execution, legality, enforceability,
genuineness, sufficiency or value of this Agreement or any of the other
Financing Agreements furnished pursuant hereto, (ii) the assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrower, any Obligor or any of their
Restricted Subsidiaries or the performance or observance by Borrower or any
Obligor of any of the Obligations; (iii) such assignee confirms that it has
received a copy of this Agreement and the other Financing Agreements,
together with such other documents and information it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, Agent and based on such
documents and information as it shall deem appropriate at the time,
85
continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Financing Agreements, (v) such assignee
appoints and authorizes Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement and the other Financing
Agreements as are delegated to Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto, and (vi)
such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement and the other
Financing Agreements are required to be performed by it as a Lender. Agent
and Lenders may furnish any information concerning Borrower or any Obligor
in the possession of Agent or any Lender from time to time to assignees and
Participants.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement and the other Financing Agreements (including, without
limitation, all or a portion of its Commitments and the Loans owing to it
and its participation in the Letter of Credit Accommodations, without the
consent of Agent or the other Lenders); provided, that, (i) such Lender's
obligations under this Agreement (including, without limitation, its
Commitment hereunder) and the other Financing Agreements shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, and Borrower, and
Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement
and the other Financing Agreements, (iii) the Participant shall not have
any rights under this Agreement or any of the other Financing Agreements
(the Participant's rights against such Lender in respect of such
participation (including rights in connection with increased costs pursuant
to Section 2.3 hereof) to be those set forth in the agreement executed by
such Lender in favor of the Participant relating thereto) and all amounts
payable by Borrower or any Obligor hereunder shall be determined as if such
Lender had not sold such participation; provided, that the Borrower shall
not be required to reimburse any Participant pursuant to the increased cost
provisions of Section 2.3 or the tax provisions of Section 6.10 in any
amount which exceeds the amount that would have been payable under such
provisions to such Lender had such Lender not sold such participation, and
(iv) if such Participant is not a bank, represent that either (A) no part
of its acquisition of its participation is made out of assets of any
employee benefit plan, or (B) after consultation, in good faith, with
Borrower and provision by Borrower of such information as may be reasonably
requested by the Participant, the acquisition and holding of such
participation does not constitute a non-exempt prohibited transaction under
Section 406 of ERISA and Section 4975 of the Code, or (C) such
participation is an "insurance company general account, " as such term is
defined in the "PTCE 95-60", and, as of the date of the transfer there is
no "employee benefit plan" with respect to which the aggregate amount of
such general account's reserves and liabilities for the contracts held by
or on behalf of such "employee benefit plan" and all other "employee
benefit plans" maintained by the same employer (and affiliates thereof as
defined in Section V(a)(1) of PTCE 95-60) or by the same employee
organization (in each case determined in accordance with the provisions of
PTCE 95-60) exceeds ten (10%) percent of the total reserves and liabilities
of such general account (as determined under PTCE 95-60) (exclusive of
separate account liabilities) plus surplus as set forth in the National
Association of Insurance Commissioners Annual Statement filed with the
state of domicile of the Participant. As used in this Section, the term
"employee benefit plan" shall have the meaning assigned to it in Title I of
ERISA and shall also include a "plan" as defined in Section 4975(e)(1) of
the Code.
(f) Nothing in this Agreement shall prevent or prohibit any Lender
from pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lenders from such Federal Reserve Bank.
(g) Borrower shall, and shall cause each of its Restricted
Subsidiaries to, assist Agent or any Lender permitted to sell assignments or
participations under this Section 13.7 in whatever manner reasonably necessary
in order to enable or effect any such assignment or participation, including
(but not limited to) the execution and delivery of any and all agreements,
notes and other documents and instruments as shall be requested and the
delivery of informational materials, appraisals or other documents for, and the
participation of relevant management in meetings and conference calls with,
potential Lenders or Participants. Borrower shall certify the correctness,
completeness and accuracy, in all material respects, of all descriptions of
Borrower and any other Credit Party and their affairs (excluding
descriptions of Parent's Subsidiaries other than Borrower and the
Restricted Subsidiaries) provided, prepared or reviewed by Borrower that
are contained in any selling materials and all other information provided
by it and included in such materials.
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13.8 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered
or to be delivered in connection herewith or therewith represents the
entire agreement and understanding concerning the subject matter hereof and
thereof between the parties hereto, and supersede all other prior
agreements, understandings, negotiations and discussions, representations,
warranties, commitments, proposals, offers and contracts concerning the
subject matter hereof, whether oral or written. In the event of any
inconsistency between the terms of this Agreement and any schedule or
exhibit hereto, the terms of this Agreement shall govern.
13.9 Counterparts. This Agreement, the other Financing Agreements and
any amendments, waivers, consents or supplements may be executed via facsimile
transmission in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all of which counterparts together shall
constitute one and the same instrument.
13.10 Judgment Currency. To the extent permitted by applicable law, the
obligations of Borrower in respect of any amount due under this Agreement
or the other Financing Agreements shall, notwithstanding any payment in any
other currency (the "Other Currency") (whether pursuant to a judgment or
otherwise), be discharged only to the extent of the amount in the currency
in which it is due (the "Agreed Currency") that Agent or any Lender may, in
accordance with normal banking procedures, purchase with the sum paid in
the Other Currency (after any premium and costs of exchange) on the
Business Day immediately after the day on which Agent or such Lender
receives the payment. If the amount in the Agreed Currency that may be so
purchased for any reason falls short of the amount originally due, Borrower
shall pay all additional amounts, in the Agreed Currency, as may be
necessary to compensate for the shortfall. Any obligation of Borrower not
discharged by that payment shall, to the extent permitted by applicable
law, be due as a separate and independent obligation and, until discharged
as provided in this Section, continue in full force and effect.
[Signature Page Follows]
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IN WITNESS WHEREOF, Agent, Lenders and Borrower have caused this
Loan and Security Agreement to be duly executed as of the day and year
first above written.
AGENT BORROWER
CONGRESS FINANCIAL CORPORATION (CENTRAL), as Agent JII, INC.
By:__________________________________ By:_______________________________
Title:_______________________________ By:________________________________
LENDERS
FIRST UNION NATIONAL BANK
By:
---------------------------------
Title:
------------------------------
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