Exhibit 10.1
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LOAN AND SECURITY AGREEMENT
by and among
U.S. HOME & GARDEN INC.,
AMPRO INDUSTRIES, INC.,
EASY GARDENER, INC.
and
EACH OF THEIR SUBSIDIARIES THAT ARE SIGNATORIES HERETO
as Borrowers,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
FOOTHILL CAPITAL CORPORATION
as the Arranger and Administrative Agent
Dated as of October 30, 2002
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as of
October 30, 2002, between and among, on the one hand, the lenders identified on
the signature pages hereof (such lenders, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), and FOOTHILL CAPITAL CORPORATION, a
California corporation, as the arranger and administrative agent for the Lenders
("Agent"), and, on the other hand, U.S. HOME & GARDEN INC., a Delaware
corporation ("Parent"), AMPRO INDUSTRIES, INC., a Michigan corporation
("Ampro"), EASY GARDENER, INC., a Delaware corporation ("Easy Gardener"), and
each of Ampro's and Easy Gardener's Subsidiaries identified on the signature
pages hereof (such Subsidiaries, together with Ampro and Easy Gardener, are
referred to hereinafter each individually as a "Borrower" and individually and
collectively, jointly and severally, as the "Borrowers").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall have
the following definitions:
"Ableco" means Ableco Finance LLC, a Delaware limited liability
company.
"Account Debtor" means any Person who is or who may become obligated
under, with respect to, or on account of, an Account, chattel paper, or a
General Intangible.
"Accounts" means all of Borrowers' now owned or hereafter acquired
right, title, and interest with respect to "accounts" (as that term is defined
in the Code), and any and all supporting obligations in respect thereof.
"ACH Transactions" means any cash management or related services
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) provided by Xxxxx Fargo or
its Affiliates for the account of Borrowers or their Subsidiaries.
"Acquisition" means the acquisition by Purchaser of the "Acquired
Assets" described in the Acquisition Documents.
"Acquisition Documents" means a certain Asset Purchase Agreement to
be entered into by and among Easy Gardener, Parent, Ampro, Weed Wizard,
Purchaser, and EYAS International, Inc. and including all the documents related
thereto, each in form and substance satisfactory to Agent.
"Additional Documents" has the meaning set forth in Section 4.4.
"Administrative Borrower" has the meaning set forth in Section 17.9.
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"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, for purposes of the definition of Eligible
Accounts and Section 7.14 hereof: (a) any Person which owns directly or
indirectly 20% or more of the securities having ordinary voting power for the
election of directors, general partners, or other members of the governing body
of a Person or 20% or more of the partnership or other ownership interests of a
Person (other than as a limited partner of such Person) shall be deemed to
control such Person, (b) each director (or comparable manager or partner) of a
Person shall be deemed to be an Affiliate of such Person, and (c) each
partnership or joint venture in which a Person is a partner or joint venturer
shall be deemed to be an Affiliate of such Person.
"Agent" means Foothill, solely in its capacity as agent for the
Lenders hereunder, and any successor thereto.
"Agent's Account" means the account identified on Schedule A-1.
"Agent Advances" has the meaning set forth in Section 2.3(e)(a).
"Agent's Liens" means the Liens granted by Borrowers to Agent for
the benefit of the Lender Group and any provider of a Bank Product under this
Agreement or the other Loan Documents.
"Agent-Related Persons" means Agent together with its Affiliates,
officers, directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"Ampro" has the meaning set forth in the preamble to this Agreement.
"Applicable Collections Amount" means, as of any date of
determination, for the applicable periods during each calendar year, an amount
equal to Borrowers' Collections with respect to Accounts for the immediately
preceding number of days set forth below corresponding to the applicable period:
Applicable Period During
Each Calendar Year Number of Days
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June 1 through June 30 75 days
July 1 through August 31 60 days
September 1 through
December 31 90 days
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January 1 through
February 28 150 days
March 1 through May 31 180 days
"Applicable Facility Interest" shall mean, for any period of
determination, for each of the Advances, Letters of Credit, Term Loan, the
dollar amount of the Interest provided for under this Agreement (notwithstanding
the limitations set forth in Section 2.6(f)).
"Applicable Revolver/Inventory Percentage" means, as of any date of
determination, for the applicable periods listed below during each calendar year
listed below, the percentage amount set forth below corresponding to the
applicable period:
Applicable Period During
Each Calendar Month Percentage
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September 1 through 50%
November 30
December 1 through 40%
August 31
"Applicable Term Loan Percentage" shall have the meaning set forth
in the definition of the term "Base Rate Term Loan Margin."
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to 1% of the Maximum Revolver Amount times the
number of full or partial years remaining until the Maturity Date.
"Assignee" has the meaning set forth in Section 14.1.
"Assignment and Acceptance" means an Assignment and Acceptance in
the form of Exhibit A-1.
"Authorized Person" means any officer or other employee of
Administrative Borrower.
"Availability" means, as of any date of determination, if such date
is a Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day, the
amount that Borrowers are entitled to borrow as Advances under Section 2.1
(after giving effect to all then outstanding Obligations (other than Bank
Product Obligations) less interest, fees and expenses that have accrued but are
not yet due and payable and subject to all sublimits and reserves applicable
hereunder).
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"Bank Product Agreements" means those certain agreements entered
into from time to time by Borrowers or their Subsidiaries in connection with the
obtaining of any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees and expenses owing by Borrowers or
their Subsidiaries to Xxxxx Fargo or its Affiliates pursuant to or evidenced by
the Bank Product Agreements and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all such amounts that a
Borrower or its Subsidiaries is obligated to reimburse to Agent or any member of
the Lender Group as a result of Agent or such member of the Lender Group
purchasing participations or executing indemnities or reimbursement obligations
with respect to the Bank Products provided to Borrowers or their Subsidiaries
pursuant to the Bank Product Agreements.
"Bank Product" means any service or facility extended to Borrowers
or their Subsidiaries by Xxxxx Fargo or any Affiliate of Xxxxx Fargo including:
(a) credit cards, (b) credit card processing services, (c) debit cards, (d)
purchase cards, (e) ACH Transactions, (f) cash management, including controlled
disbursement, accounts or services, or (g) Hedge Agreements.
"Bank Product Reserves" means, as of any date of determination, the
lesser of (a) $2,500,000, and (b) the amount of reserves that Agent has
established (based upon Xxxxx Fargo's or its Affiliate's reasonable
determination of the credit exposure in respect of then extant Bank Products)
for Bank Products then provided or outstanding; provided, however, that in order
to qualify as Bank Product Reserves, such reserves must be established at or
about the time that Xxxxx Fargo or its Affiliates first provide the applicable
Bank Product.
"Bankruptcy Code" means the United States Bankruptcy Code, as in
effect from time to time.
"Base LIBOR Rate" means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/16%), on the basis of the rates at which Dollar deposits are offered
to major banks in the London interbank market on or about 11:00 a.m. (California
time) 2 Business Days prior to the commencement of the applicable Interest
Period, for a term and in amounts comparable to the Interest Period and amount
of the LIBOR Rate Loan requested by Administrative Borrower in accordance with
this Agreement, which determination shall be conclusive in the absence of
manifest error.
"Base Rate" means, the rate of interest announced within Xxxxx Fargo
at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Xxxxx Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Xxxxx Fargo may designate.
"Base Rate Loan" means each portion of an Advance or the Term Loan
that bears interest at a rate determined by reference to the Base Rate.
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"Base Rate Margin" means 0.50 percentage point.
"Base Rate Term Loan Margin" means 7.00 percentage points (the
"Applicable Term Loan Percentage") plus the Triggering Event Percentage;
provided, however, that (a) if Borrowers have failed to repay in full in cash
the outstanding principal balance of the Term Loan (inclusive of the applicable
Term Loan PIK Amount theretofore so added) prior to the first anniversary of the
Closing Date then the Applicable Term Loan Percentage shall be automatically
increased by 2.00 percentage points effective as of the first anniversary of the
Closing Date such that as of the first anniversary of the Closing Date, the
Applicable Term Loan Percentage shall equal 9.00 percentage points, and (b) if
Borrowers have failed to repay in full in cash the outstanding principal balance
of the Term Loan (inclusive of the applicable Term Loan PIK Amount theretofore
so added) prior to the second anniversary of the Closing Date then the
Applicable Term Loan Percentage shall be automatically increased by an
additional 2.00 percentage points effective as of the second anniversary of the
Closing Date such that as of the second anniversary of the Closing Date, the
Applicable Term Loan Percentage shall equal 11.00 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA Affiliate of
any Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
"Books" means all of each Borrower's and its Subsidiaries' now owned
or hereafter acquired books and records (including all of its Records
indicating, summarizing, or evidencing its assets (including the Collateral) or
liabilities, all of each Borrower's or its Subsidiaries' Records relating to its
or their business operations or financial condition, and all of its or their
goods or General Intangibles related to such information).
"Borrower" and "Borrowers" have the respective meanings set forth in
the preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances (or
term loan, in the case of the Term Loan) made on the same day by the Lenders (or
Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or by
Agent in the case of an Agent Advance, in each case, to Administrative Borrower.
"Borrowing Base" has the meaning set forth in Section 2.1.
"Borrowing Base Certificate" means a certificate in the form of
Exhibit B-1.
"Borrowing Base Collateral" means that portion of the Collateral
composed of Accounts, Inventory and payment intangibles, and the proceeds of
each of the foregoing.
"Borrowing Base Extraordinary Receipts" means all Extraordinary
Receipts received by a Borrower in respect of the Borrowing Base Collateral.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close, except
that, if a determination of a
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Business Day shall relate to a LIBOR Rate Loan, the term "Business Day" also
shall exclude any day on which banks are closed for dealings in Dollar deposits
in the London interbank market.
"Canadian Dollars" means the lawful money of Canada.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness represented by
obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Xxxxx'x,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or Xxxxx'x, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof that are
either (i) issued by any bank organized under the laws of the United States or
any state thereof which bank has a rating of A or A2, or better, from S&P or
Xxxxx'x, or (ii) in an amount less than or equal to $100,000 in the aggregate
issued by any other bank insured by the Federal Deposit Insurance Corporation.
"Cash Management Bank" has the meaning set forth in Section 2.7(a).
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash management
service agreements, in form and substance satisfactory to Agent, each of which
is among Administrative Borrower, Agent, and one of the Cash Management Banks.
"Change of Control" means (a) any "person" or "group" (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act), becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of 20% or more, of the Stock of Parent having the right to vote for the election
of members of the Parent Board of Directors, (b) a majority of the members of
the Parent Board of Directors do not constitute Parent Continuing Directors, (c)
Parent ceases to own and control 100% of the outstanding Stock of Ampro and Easy
Gardener, (d) Easy Gardener ceases to directly own and control 100% of the
outstanding Stock of Easy Gardener U.K. and Xxxxxxxxx Group, or (e) Xxxxxxxxx
Group ceases to directly own and control 100% of the outstanding Stock of
Xxxxxxxxx Products.
"Closing Catch-Up Payment" means an amount equal to not more than
$525,000 to be paid by Borrower to Parent and paid by Parent to the Trust on or
about the Closing Date on account of all of the interest accrued as of October
15, 2002 on the Subordinated Indebtedness that was deferred pursuant to the
Subordinated Junior Debt Documents.
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"Closing Date" means the date of the making of the initial Advance
or the Term Loan (or other extension of credit) hereunder.
"Closing Date Business Plan" means the set of Projections of
Borrowers for the 3 year period following the Closing Date (on a year by year
basis, and for the 1 year period following the Closing Date, on a month by month
basis), in form and substance (including as to scope and underlying assumptions)
satisfactory to Agent.
"Code" means the New York Uniform Commercial Code, as in effect from
time to time.
"Collateral" means all of each Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) money or other assets of each such Borrower that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(i) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, money,
deposit accounts, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
Notwithstanding the foregoing, Collateral shall not include (x) the last day of
the term of any lease governed by the laws of any province of Canada (but upon
the enforcement of Agent's rights hereunder, Agent shall stand possessed of such
last day in trust to assign the same to any Person acquiring such term) or (y)
for the purposes of Collateral located in Canada, any Consumer Goods (as such
term is defined in the PPSA).
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, in each case, in form and
substance satisfactory to Agent.
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"Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) of Borrowers or Parent.
"Commitment" means, with respect to each Lender, its Revolver
Commitment, its Term Loan Commitment, or its Total Commitment, as the context
requires, and, with respect to all Lenders, their Revolver Commitments, their
Term Loan Commitments, or their Total Commitments, as the context requires, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of the
Administrative Borrower to Agent.
"Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by the applicable Borrower or
Guarantor, Agent, and the applicable securities intermediary with respect to a
Securities Account or bank with respect to a deposit account.
"Copyright Security Agreement" means a copyright security agreement
executed and delivered by each Borrower and Agent, the form and substance of
which is satisfactory to Agent.
"Cost Notice" has the meaning set forth in Section 2.14.
"Daily Balance" means, with respect to each day during the term of
this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account maintained
by any Borrower.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance
(or other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the first 3
days from and after the date the relevant payment is due, and (b) thereafter, at
the interest rate then applicable to Advances that are Base Rate Loans
(inclusive of the Base Rate Margin applicable thereto).
"Designated Account" means that certain DDA of Administrative
Borrower identified on Schedule D-1.
"Dilution" means, as of any date of determination, a percentage,
based upon the experience of the immediately prior 360 days, that is the result
of dividing the Dollar (or Dollar
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equivalent) amount of (a) bad debt write-downs, discounts, advertising
allowances, credits, or other dilutive items with respect to the Accounts during
such period, by (b) Borrowers' gross xxxxxxxx with respect to Accounts during
such period.
"Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of 5%.
"Disbursement Letter" means an instructional letter executed and
delivered by Administrative Borrower to Agent regarding the extensions of credit
to be made on the Closing Date, the form and substance of which is satisfactory
to Agent.
"Dollars" or "$" means United States dollars.
"Dollar Equivalents" means, in respect of Canadian Dollars or any
other foreign currency, as of any date of determination, the Dollar equivalent
thereof determined by Agent in accordance with Agent's customary practices.
"Due Diligence Letter" means the due diligence letter sent by
Agent's counsel to Administrative Borrower, together with Administrative
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"Easy Gardener" has the meaning set forth in the preamble to this
Agreement.
"Easy Gardener Stock Pledge Agreement" means a stock pledge
agreement, in form and substance satisfactory to Agent, executed and delivered
by Easy Gardener to Agent with respect to the pledge of the Stock of Xxxxxxxxx
Group and Easy Gardener U.K. owned by Easy Gardener.
"Easy Gardener U.K." means Easy Gardener U.K. Ltd., a company
organized under the laws of England and Wales, and a wholly-owned Subsidiary of
Easy Gardener.
"EBITDA" means, with respect to any fiscal period, Parent's and its
Subsidiaries' consolidated net earnings (or loss), minus extraordinary gains and
extraordinary non-cash charges for "write-offs" of goodwill, plus interest
expense, income taxes, and depreciation and amortization for such period, as
each component thereof is determined in accordance with GAAP.
"Egarden" means Egarden, Inc., a Delaware corporation.
"Eligible Accounts" means Eligible Domestic Accounts and Eligible
Canadian Accounts.
"Eligible Canadian Accounts" means any Account of Borrowers as to
which each of the following is applicable: (a) such Account does not qualify as
an Eligible Domestic Account solely because of one or more of the following
reasons: (y) such Account is payable in Canadian Dollars, or (z) the Account
Debtor with respect to such Account maintains its chief executive office in
Canada (other than Quebec and the Maritime provinces) rather than in the
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United States or is organized under the laws of Canada or a political
subdivision thereof (other than Quebec and the Maritime provinces) rather than
under the laws of the United States or any state thereof, and (b) Agent has a
perfected first priority security interest in such Account.
"Eligible Domestic Accounts" means those Accounts created by one of
Borrowers in the ordinary course of its business, that arise out of its sale of
goods or rendition of services, that comply with each of the representations and
warranties respecting Eligible Domestic Accounts made by Borrowers under the
Loan Documents, and that are not excluded as ineligible by virtue of one or more
of the criteria set forth below; provided, however, that such criteria may be
fixed and revised from time to time by Agent in Agent's Permitted Discretion to
address the results of any audit performed by Agent from time to time after the
Closing Date. In determining the amount to be included, Eligible Domestic
Accounts shall be calculated net of customer deposits and unapplied cash
remitted to Borrowers. Eligible Domestic Accounts shall not include the
following:
(a) Accounts that the Account Debtor has failed to pay within 120
days of original invoice date or Accounts with selling terms of more than 60
days,
(b) Accounts owed by an Account Debtor (or its Affiliates) where 50%
or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
employee, Affiliate, or agent of any Borrower,
(d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a xxxx and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars,
(f) Accounts with respect to which the Account Debtor either (i)
does not maintain its chief executive office in the United States, or (ii) is
not organized under the laws of the United States or any state thereof, or (iii)
is the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
(y) the Account is supported by an irrevocable letter of credit satisfactory to
Agent (as to form, substance, and issuer or domestic confirming bank) that has
been delivered to Agent and is directly drawable by Agent, or (z) the Account is
covered by credit insurance in form, substance, and amount, and by an insurer,
satisfactory to Agent,
(g) Accounts with respect to which the Account Debtor is either (i)
the United States or any department, agency, or instrumentality of the United
States (exclusive, however, of Accounts with respect to which the applicable
Borrower has complied, to the reasonable satisfaction of Agent, with the
Assignment of Claims Act, 31 USC ss. 3727), or (ii) any state of the United
States (exclusive, however, of (y) Accounts owed by any state that does not have
a statutory counterpart to the Assignment of Claims Act, or (z) Accounts owed by
any state that
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does have a statutory counterpart to the Assignment of Claims Act as to which
the applicable Borrower has complied to Agent's satisfaction),
(h) Accounts with respect to which the Account Debtor is a creditor
of any Borrower, has or has asserted a right of setoff, has disputed its
liability, or has made any claim with respect to its obligation to pay the
Account, to the extent of such claim, right of setoff, or dispute,
(i) Accounts with respect to an Account Debtor, other than The Home
Depot, Xxxx'x Companies, Inc., Ace Hardware Corp., and Wal-Mart Corp., whose
total obligations owing to Borrowers exceed 10%, or (y) if the Account Debtor is
The Home Depot, 50% during the period commencing on December 1 and ending on
August 31 of each calendar year, or 55% during the period commencing on
September 1 and ending on November 30 of each calendar year, as the case may be,
or (z) if the Account Debtor is Xxxx'x Companies, Inc., Ace Hardware Corp., or
Wal-Mart Corp., in each case, 15% (such percentage as applied to a particular
Account Debtor being subject to reduction by Agent in its Permitted Discretion
if the creditworthiness of such Account Debtor deteriorates) of all Eligible
Domestic Accounts, to the extent of the obligations owing by such Account Debtor
in excess of such percentage,
(j) Accounts with respect to which the Account Debtor is subject to
an Insolvency Proceeding, is not Solvent, has gone out of business, or as to
which a Borrower has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Account Debtor; except
for those Accounts with respect to which the Account Debtor is K-Mart or Frank's
Nurseries and such Accounts are created after the commencement of such Account
Debtors' Insolvency Proceeding,
(k) Accounts with respect to which the Account Debtor is located in
the states of New Jersey, Minnesota, or West Virginia (or any other state that
requires a creditor to file a business activity report or similar document in
order to bring suit or otherwise enforce its remedies against such Account
Debtor in the courts or through any judicial process of such state), unless the
applicable Borrower has qualified to do business in New Jersey, Minnesota, West
Virginia, or such other states, or has filed a business activities report with
the applicable division of taxation, the department of revenue, or with such
other state offices, as appropriate, for the then-current year, or is exempt
from such filing requirement,
(l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,
(m) Accounts that are not subject to a valid and perfected first
priority Agent's Lien,
(n) Accounts with respect to which (i) the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor, or
(o) Accounts that represent the right to receive progress payments
or other advance xxxxxxxx that are due prior to the completion of performance by
the applicable Borrower of the subject contract for goods or services.
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"Eligible Inventory" means Inventory of Borrowers consisting of raw
material and first quality finished goods held for sale in the ordinary course
of Borrowers' business located at one of the business locations of Borrowers set
forth on Schedule E-1 (or in-transit between any such locations), that complies
with each of the representations and warranties respecting Eligible Inventory
made by Borrowers in the Loan Documents, and that is not excluded as ineligible
by virtue of the one or more of the criteria set forth below; provided, however,
that such criteria may be fixed and revised from time to time by Agent in
Agent's Permitted Discretion to address the results of any audit or appraisal
performed by Agent from time to time after the Closing Date. In determining the
amount to be so included, Inventory shall be valued at the lower of cost or
market on a basis consistent with Borrowers' historical accounting practices. An
item of Inventory shall not be included in Eligible Inventory if:
(p) a Borrower does not have good, valid, and marketable title
thereto,
(q) it is not located at one of the locations in the United States
set forth on Schedule E-1 or in transit from one such location to another such
location;
(r) it is located on real property owned or leased by a Borrower or
in a contract warehouse, in each case, unless it is subject to a Collateral
Access Agreement executed by the lessor, warehouseman, or other third party, as
the case may be, and unless it is segregated or otherwise separately
identifiable from goods of others, if any, stored on the premises,
(s) it is not subject to a valid and perfected first priority
Agent's Lien,
(t) it consists of defective goods returned or rejected by a
Borrower's customers; provided, however, that if goods are returned or rejected
by a Borrower's customer for reasons other than quality or merchantability, such
goods will be deemed to be Eligible Inventory if they are returned to such
Borrower (i) in first quality "in box" condition, (ii) ready for immediate sale
by such Borrower to another of such Borrower's customers, and (iii) to the
extent the gross sales amount of such goods does not exceed $500,000 in the
aggregate during any fiscal year, or
(u) it consists of goods that are obsolete or slow moving,
restrictive or custom items, work-in-process, or goods that constitute spare
parts, packaging and shipping materials, supplies used or consumed in a
Borrower's business, xxxx and hold goods, defective goods, "seconds," or
Inventory acquired on consignment.
"Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender that was
party hereto as of the Closing Date including, without
12
limitation, a fund, money market account, investment account or other account
managed by such a Lender or an Affiliate of such Lender or its investment
manager (a "Related Fund"), (e) so long as no Event of Default has occurred and
is continuing, any other Person approved by Agent and Administrative Borrower
(which approval of Administrative Borrower shall not be unreasonably withheld),
and (f) during the continuation of an Event of Default, any other Person
approved by Agent.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Borrower or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by any Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on Borrowers, relating
to the environment, employee health and safety, or Hazardous Materials,
including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC ss. 1251
et seq; the Toxic Substances Control Act, 15 USC ss. 2601 et seq; the Clean Air
Act, 42 USC ss. 7401 et seq.; the Safe Drinking Water Act, 42 USC ss. 3803 et
seq.; the Oil Pollution Act of 1990, 33 USC ss. 2701 et seq.; the Emergency
Planning and the Community Right-to-Know Act of 1986, 42 USC ss. 11001 et seq.;
the Hazardous Material Transportation Act, 49 USC ss. 1801 et seq.; and the
Occupational Safety and Health Act, 29 USC ss.651 et seq. (to the extent it
regulates occupational exposure to Hazardous Materials); any state and local or
foreign counterparts or equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrowers' now owned or hereafter acquired
right, title, and interest with respect to equipment, machinery, machine tools,
motors, furniture, furnishings, fixtures, vehicles (including motor vehicles),
tools, parts, goods (other than consumer goods, farm products, or Inventory),
wherever located, including all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing.
13
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
a Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which a Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with a Borrower and whose employees are aggregated with the employees of a
Borrower under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of Borrowers aged in excess of their
historical levels with respect thereto and all book overdrafts in excess of
their historical practices with respect thereto, in each case as determined by
Agent in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Excluded Subsidiaries" means the Trust, Egarden, Weed Wizard,
Golden West, and Easy Gardener U.K.
"Existing Lenders" means PNC Business Credit and LEG Partners
Debenture SBIC, L.P., LEG Partners III SBIC, L.P., LEG Co-Investor, LLC, 555
Madison Investors II LLC (f/k/a LEG Co-Investors II, LLC) and 555 Madison
Investors, LLC.
"Extraordinary Receipts" means any cash received by Borrowers or any
of their Subsidiaries not in the ordinary course of business including (a)
foreign, United States, state or local tax refunds, (b) pension plan reversions,
(c) proceeds of insurance (except as otherwise provided in this Agreement), (d)
judgments, proceeds of settlements or other consideration of any kind in
connection with any cause of action (excluding collections of Accounts), (e)
condemnation awards (and payments in lieu thereof), (f) indemnity payments and
(g) any purchase price adjustments received in connection with any purchase
agreement.
"Fee Letter" means that certain fee letter, dated as of even date
herewith, among Borrowers, Agent and the Lenders, in form and substance
satisfactory to Agent and the Lenders.
"FEIN" means Federal Employer Identification Number.
"Foothill" means Foothill Capital Corporation, a California
corporation.
14
"Funded Senior Debt Ratio" means, as of any month end, the ratio of
Total Senior Funded Debt as of such month end to EBITDA for the 12-month period
ended as of such month end.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section 2.13(b)(b).
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to general intangibles
(including payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.
"Golden West" means Golden West Agri-Products, Inc., a California
corporation.
"Xxxxx Settlement Agreement" means that certain settlement agreement
entered into on or about the Closing Date, by and among Parent, Easy Gardener,
LEG Partners Debenture SBIC, L.P., a Delaware limited partnership, LEG Partners
III SBIC, L.P., a Delaware limited partnership, LEG Co-Investors, LLC, a
Delaware limited liability company, 555 Madison Investors II LLC, f/k/a LEG
Co-Investors II, LLC, a Delaware limited liability company, 555 Madison
Investors, LLC, a Delaware limited liability company, Xxxxx Associates LLC, a
New York limited liability company and Xxxxx Associates Incorporated, a New York
corporation.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"Guarantor" means Parent and Weed Wizard, and any other Person from
time to time executing a Guaranty or similar agreement in favor of Agent, for
the benefit of the Lender Group and any provider of a Bank Product.
"Guaranty" means that certain Guaranty and Security Agreement, or
similar agreement, executed and delivered by Guarantor, in favor of Agent, for
the benefit of the Lender Group and any provider of a Bank Product, in form and
substance satisfactory to Agent.
15
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all transactions, agreements, or
documents now existing or hereafter entered into between Borrowers or their
Subsidiaries and Xxxxx Fargo or its Affiliates, which provide 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 Borrowers or their Subsidiaries' exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or
currency valuations or commodity prices.
"Holdout Lender" has the meaning set forth in Section 15.2(a).
"In Season Period" means any period of time other than the Initial
Seasonal Overadvance Period and the Remaining Seasonal Overadvance Period.
"Indebtedness" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, interest rate swaps, or other financial products, (c) all
obligations under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of Borrowers or their Subsidiaries, irrespective
of whether such obligation or liability is assumed, (e) all obligations for the
deferred purchase price of assets (other than trade debt incurred in the
ordinary course of business and repayable in accordance with customary trade
practices), and (f) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Initial Seasonal Overadvance Period" means the period of time
commencing on the Closing Date and ending on January 31, 2003.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
16
"Intercompany Subordination Agreement" means that certain
intercompany subordination agreement entered into by and among Borrowers and
their Affiliates, in form and substance satisfactory to Agent.
"Interlender Agreement" means that certain letter agreement, of even
date herewith, between Foothill and Ableco, which set forth, among other things,
the parties' rights and obligations with respect to this Agreement.
"Interest Period" means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan and ending
1, 2, or 3 months thereafter; provided, however, that (a) if any Interest Period
would end on a day that is not a Business Day, such Interest Period shall be
extended (subject to clauses (c)-(e) below) to the next succeeding Business Day,
(b) interest shall accrue at the applicable rate based upon the LIBOR Rate from
and including the first day of each Interest Period to, but excluding, the day
on which any Interest Period expires, (c) any Interest Period that would end on
a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (d) with
respect to an Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, or 3 months
after the date on which the Interest Period began, as applicable, and (e)
Borrowers (or Administrative Borrower on behalf thereof) may not elect an
Interest Period which will end after the Maturity Date.
"Inventory" means all Borrowers' now owned or hereafter acquired
right, title, and interest with respect to inventory, including goods held for
sale or lease or to be furnished under a contract of service, goods that are
leased by a Borrower as lessor, goods that are furnished by a Borrower under a
contract of service, and raw materials, work in process, or materials used or
consumed in a Borrower's business.
"Investment" means, with respect to any Person, any investment by
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), purchases or other
acquisitions for consideration of Indebtedness or Stock or all or substantially
all of the assets of such other Person, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"Investment Property" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to "investment property" as
that term is defined in the Code, and any and all supporting obligations in
respect thereof, other than (a) Easy Gardener's right, title, and interest in
the Stock of Weed Wizard, and (b) Parent's right, title, and interest in the
Stock of Golden West, the Trust, and Egarden.
"IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.
17
"Issuing Lender" means Foothill or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become an Issuing Lender for the purpose of issuing
L/Cs or L/C Undertakings pursuant to Section 2.12.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Lender" and "Lenders" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by a Borrower or a Guarantor
under any of the Loan Documents that are paid or incurred by the Lender Group,
(b) fees or charges paid or incurred by Agent in connection with the Lender
Group's transactions with Borrowers, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and UCC and PPSA searches and
including searches with the patent and trademark office, the copyright office,
or the department of motor vehicles), filing, recording, publication, appraisal
(including periodic Collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement), real estate surveys, real estate title policies and
endorsements, and environmental audits, (c) costs and expenses incurred by Agent
in the disbursement of funds to or for the account of Borrowers (by wire
transfer or otherwise), (d) charges paid or incurred by Agent resulting from the
dishonor of checks, (e) reasonable costs and expenses paid or incurred by the
Lender Group to correct any default or enforce any provision of the Loan
Documents, or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale, or advertising to sell the
Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) audit fees and expenses of Agent related to audit examinations
of the Books to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, (g) reasonable costs and expenses of
third party claims or any other suit paid or incurred by the Lender Group in
enforcing or defending the Loan Documents or in connection with the transactions
contemplated by the Loan Documents or the Lender Group's relationship with any
Borrower or any guarantor of the Obligations, (h) Agent's and each Lender's
reasonable fees and expenses (including attorneys fees) incurred in advising,
structuring, drafting, reviewing, administering, or amending the Loan Documents,
and (i) Agent's and each Lender's reasonable fees and expenses (including
attorneys fees) incurred in terminating, enforcing (including attorneys fees and
expenses incurred in connection with a "workout," a "restructuring," or an
Insolvency Proceeding concerning any Borrower or in exercising rights or
18
remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether suit is brought, or in taking any Remedial Action
concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, and the officers, directors,
employees, and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit plus 100% of the
amount of outstanding time drafts accepted by an Underlying Issuer as a result
of drawings under Underlying Letters of Credit.
"Liabilities" has the meaning set forth in Section 2.16.
"LIBOR Deadline" has the meaning set forth in Section 2.13(b)(a).
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
"LIBOR Option" has the meaning set forth in Section 2.13.
"LIBOR Rate" means, for each Interest Period for each LIBOR Rate
Loan, the rate per annum determined by Agent (rounded upwards, if necessary, to
the next 1/16%) by dividing (a) the Base LIBOR Rate for such Interest Period, by
(b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and
as of the effective day of any change in the Reserve Percentage.
"LIBOR Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" means 2.75 percentage points.
"Lien" means any interest in an asset securing an obligation owed
to, or a claim by, any Person other than the owner of the asset, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product Agreements,
the Cash Management Agreements, the Control Agreements, the Copyright Security
Agreement, the
19
Disbursement Letter, the Due Diligence Letter, the Fee Letter, the Guaranty, the
Intercompany Subordination Agreement, the Letters of Credit, the Officers'
Certificate, the Patent Security Agreement, the Stock Pledge Agreements, the
Trademark Security Agreement, any note or notes executed by a Borrower in
connection with this Agreement and payable to a member of the Lender Group, and
any other agreement entered into, now or in the future, by any Borrower and the
Lender Group in connection with this Agreement.
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrowers taken as a whole, (b) a material
impairment of a Borrower's ability to perform its obligations under the Loan
Documents to which it is a party or of the Lender Group's ability to enforce the
Obligations or realize upon the Collateral, or (c) a material impairment of the
enforceability or priority of the Agent's Liens with respect to the Collateral
as a result of an action or failure to act on the part of a Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Interest" shall mean, for any period of determination, for
each of the Advances, Letters of Credit, or Term Loan, the dollar amount of
interest permitted to be paid under this Agreement under any law that a court of
competent jurisdiction shall, in a final determination, deem applicable.
"Maximum Revolver Amount" means $23,000,000.
"Negotiable Collateral" means all of Borrowers' now owned and
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"Net Recovery Percentage" means the percentage of the book value of
Borrowers' Inventory that is estimated to be recoverable in an orderly
liquidation of such Inventory, such percentage to be as determined from time to
time by a qualified appraisal company selected by Agent.
"Non-Borrowing Base Extraordinary Receipts" means all Extraordinary
Receipts other than Borrowing Base Extraordinary Receipts.
"Obligations" means (a) all loans (including the Term Loan),
Advances, debts, principal, interest (including any interest that, but for the
provisions of the Bankruptcy Code, would have accrued), contingent reimbursement
obligations with respect to outstanding Letters of Credit, premiums, liabilities
(including all amounts charged to Borrowers' Loan Account pursuant hereto),
obligations, fees (including the fees provided for in the Fee Letter), charges,
costs, Lender Group Expenses (including any fees or expenses that, but for the
provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties of any kind and description owing by Borrowers
to the Lender Group pursuant to or evidenced by the Loan Documents and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including all interest not paid when due and all Lender Group Expenses that
Borrowers are
20
required to pay or reimburse by the Loan Documents, by law, or otherwise and (b)
all Bank Product Obligations. Any reference in this Agreement or in the Loan
Documents to the Obligations shall include all amendments, changes, extensions,
modifications, renewals replacements, substitutions, and supplements, thereto
and thereof, as applicable, both prior and subsequent to any Insolvency
Proceeding.
"Officers' Certificate" means the representations and warranties of
officers form submitted by Agent to Administrative Borrower, together with
Borrowers' completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"Originating Lender" has the meaning set forth in Section 14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Parent Board of Directors" means the board of directors of Parent
or any committee thereof duly authorized to act on behalf of the board.
"Parent Continuing Director" means (a) any member of the Parent
Board of Directors who was a director of Parent on the Closing Date, and (b) any
individual who becomes a member of the Parent Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Parent Board of Directors by a majority of the Parent Continuing Directors, but
excluding any such individual originally proposed for election in opposition to
the Parent Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors of Parent
(as such terms are used in Rule 14a-11 and the Exchange Act) and whose initial
assumption of office resulted from such contest or the settlement thereof.
"Parent Stock Pledge Agreement" means a stock pledge agreement, in
form and substance satisfactory to Agent, executed and delivered by Parent to
Agent with respect to the pledge of the Stock of Ampro and Easy Gardener owned
by Parent.
"Participant" has the meaning set forth in Section 14.1(e).
"Participant Register" has the meaning set forth in Section 14.1(i).
"Patent Security Agreement" means a patent security agreement
executed and delivered by Borrowers and Agent, the form and substance of which
is satisfactory to Agent.
"Pay-Off Letter" means a letter, in form and substance satisfactory
to Agent and Ableco, from Existing Lenders to Agent respecting the amount
necessary to repay in full all of the obligations of Borrowers and Guarantor
owing to Existing Lender (other than contingent obligations which by their terms
survive repayment of such obligations), except as set forth in the Xxxxx
Settlement Agreement, and obtain a release of all of the Liens existing in favor
of Existing Lender in and to the assets of Borrowers and Guarantor.
21
"Permitted Affiliate Transactions" means (a) the Acquisition, (b)
the Permitted Investments set forth in clauses (d), (e), (f), (g), (h), (i), (j)
and (k) of the definition thereof, (c) Permitted Distributions, and (d) sales of
Inventory by a Borrower to Easy Gardener U.K. on terms more favorable to Easy
Gardener U.K. than those offered by such Borrower to a non-Affiliate; provided,
however, that the sales price of such Inventory shall not be less than such
Borrower's cost; provided, further, however, that to the extent the gross
receivables owed by Easy Gardener U.K. to such Borrower arising from the sale of
such Inventory exceeds 15% of the gross receivables of all the Borrowers in the
aggregate at any one time, such excess shall not constitute a Permitted
Affiliate Transaction.
"Permitted Catch-Up Payments" means an amount, in any 12 consecutive
month period, not to exceed the lesser of (a) $575,000 or (b) the amount of
monthly interest due on the Subordinated Indebtedness that was deferred pursuant
to the Subordinated Junior Debt Documents at the time such Permitted Catch-Up
Payment is to be made, so long as (i) no Event of Default has occurred and is
continuing or would result therefrom, (ii) after giving effect to the payment of
such Permitted Catch-Up Payment, Borrowers have Excess Availability of no less
than (x) $3,000,000 during the In Season Period, (y) $6,500,000 during the
Initial Seasonal Overadvance Period, or (z) $5,000,000 during the Remaining
Seasonal Overadvance Period, as applicable, and (iii) immediately following
Parent's receipt of such Permitted Catch-Up Payment from a Borrower, Parent pays
such Permitted Catch-Up Payment to the Trust, and (iv) not less than 12 months
have lapsed since Borrowers distributed to Parent the last Permitted Catch-Up
Payment, except for the Closing Catch-Up Payment.
"Permitted Discretion" means a determination made in good faith and
in the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions by
Borrowers or their Subsidiaries of Equipment in an amount not to exceed $150,000
in the aggregate for all Borrowers and their Subsidiaries during any fiscal
year, (b) sales or other dispositions by Borrowers or their Subsidiaries of
Equipment that is substantially worn, damaged, or obsolete in the ordinary
course of business, (c) sales by Borrowers or their Subsidiaries of Inventory to
buyers in the ordinary course of business (including sales of slow-moving
Inventory, consistent with Borrowers' past practices), (d) the use or transfer
of money or Cash Equivalents by Borrowers or their Subsidiaries in a manner that
is not prohibited by the terms of this Agreement or the other Loan Documents,
(e) the licensing by Borrowers or their Subsidiaries, on a non-exclusive basis,
of patents, trademarks, copyrights, and other intellectual property rights in
the ordinary course of business, (f) the abandonment or other disposition by a
Borrower of intellectual property that is immaterial to the business of any
Borrower and not related to Inventory currently being held for sale by any
Borrower, and (g) the sale or other disposition by Borrowers or Parent of all of
the assets or stock of Weed Wizard.
"Permitted Distributions" means (a) distributions or declaration and
payment of dividends by a Borrower to another Borrower, (b) distributions or
declaration and payment of dividends by a Borrower to Parent solely to pay for
administrative and/or operating expenses of Parent that are related solely to
Parent's management of Borrowers and their respective Subsidiaries, or in its
capacity as the holding company of the Borrowers and their respective
Subsidiaries (as well as, for purposes of this clause (b), administrative
expenses which may be
22
fairly allocable to the Excluded Subsidiaries in accordance with Parent's past
practices), or (c) subject to Section 7.8(b), and so long as no Event of Default
has occurred and is continuing or would result therefrom distributions or
declaration and payment of dividends by a Borrower to Parent solely to allow
Parent to make regularly scheduled payments of interest on account of the
Subordinated Indebtedness, the Closing Catch-up Payment and the Permitted
Catch-Up Payment.
"Permitted Investments" means (a) Investments in Cash Equivalents,
(b) investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) Investments by any Borrower in any other Borrower provided that if
any such Investment is in the form of Indebtedness, such Indebtedness shall be
subject to the terms and conditions of the Intercompany Subordination Agreement,
(e) subject to Section 7.8(b), and so long as no Event of Default has occurred
and is continuing or would result therefrom, intercompany loans by any Borrower
to Parent, which Indebtedness shall be subject to the terms and conditions of
the Intercompany Subordination Agreement, solely to allow Parent to make
regularly scheduled payments of interest on account of the Subordinated
Indebtedness, the Closing Catch-Up Payment and the Permitted Catch-Up Payments,
(f) so long as no Event of Default has occurred and is continuing or would
result therefrom or an Insolvency Proceeding has not been commenced by Weed
Wizard or against Weed Wizard, an Investment by any Borrower in Weed Wizard;
provided, that such Investment shall be made into Weed Wizard solely to pay for
obligations arising from the settlement of the Weed Wizard Litigation and unpaid
expenses incurred in connection with the Weed Wizard Litigation, and such
Investment shall not exceed $300,000 (in addition to the monies funded through
one or more Borrowers by A.A.B.B., Inc.) provided, further, however that if any
such Investment is in the form of Indebtedness, such Indebtedness shall be
subject to the terms and conditions of the Intercompany Subordination Agreement,
(g) so long as no Event of Default has occurred and is continuing or would
result therefrom, Investments by any Borrower in Easy Gardener U.K. in an amount
not to exceed $250,000 in the aggregate during any fiscal year, provided,
however, that if Easy Gardener U.K. receives financing from any lender, then the
amount of such Investments, together with any accrued interest, fees, expenses
or otherwise, accruing in respect of or arising from such Investments, shall be
immediately paid in full in cash to the Borrowers, (h) Investments made by
Parent and Borrowers prior to the Closing Date which Investments have been
disclosed on Schedule P-1 hereto (provided that the principal amount thereof
shall not be increased), (i) so long as no Event of Default has occurred and is
continuing or would result therefrom, advances made by a Borrower to its
employees, officers, directors or Affiliates in the ordinary course of such
Borrower's business, provided that such outstanding advances shall not exceed
$100,000 in the aggregate for all Borrowers at any one time, (j) so long as no
Event of Default has occurred and is continuing or would result therefrom,
intercompany loans by any Borrower to Golden West in an amount not to exceed
$200,000 in the aggregate outstanding at any one time for all Borrowers or to
Weed Wizard in an amount not to exceed $450,000 in the aggregate outstanding at
any one time for all Borrowers for the sole purpose of permitting such Persons
to satisfy their obligations arising from general operating and administrative
expenses, which Indebtedness owed by such Persons shall, in each case, be
subject to the terms and conditions of the Intercompany Subordination Agreement;
provided that such intercompany loans by Borrowers may be paid directly to
Parent in order to satisfy, or on occasion of, the obligations of Golden West
and Weed Wizard to reimburse Parent for their respective ratable share of
Parent's general operating and administrative expenses; provided, however, that
in the event an Insolvency Proceeding is commenced by Weed Wizard
23
or against Weed Wizard, neither Parent nor any Borrower shall be permitted to
advance intercompany loans to Weed Wizard, and (k) intercompany loans by any
Borrower to Parent for the purposes set forth in clause (b) of the definition of
"Permitted Distributions" (without duplication of any amounts distributed in
accordance with said clause (b)); provided that such intercompany loans shall be
subject to the terms and conditions of the Intercompany Subordination Agreement.
"Permitted Liens" means (a) Liens held by Agent for the benefit of
Agent, the Lenders and any provider of a Bank Product, (b) Liens for unpaid
taxes that either (i) are not yet delinquent, or (ii) do not constitute an Event
of Default hereunder and are the subject of Permitted Protests, (c) Liens set
forth on Schedule P-2, (d) the interests of lessors under operating leases, (e)
purchase money Liens or the interests of lessors under Capital Leases to the
extent that such Liens or interests secure Permitted Purchase Money Indebtedness
and so long as such Lien attaches only to the asset purchased or acquired and
the proceeds thereof, (f) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business and not in connection
with the borrowing of money, and which Liens either (i) are for sums not yet
delinquent, or (ii) are the subject of Permitted Protests, (g) Liens arising
from deposits made in connection with obtaining worker's compensation or other
unemployment insurance, (h) Liens or deposits to secure performance of bids,
tenders, or leases incurred in the ordinary course of business and not in
connection with the borrowing of money, (i) Liens granted as security for surety
or appeal bonds in connection with obtaining such bonds in the ordinary course
of business, and (j) Liens resulting from any judgment or award that is not an
Event of Default hereunder.
"Permitted Protest" means the right of Borrowers, or any of their
Subsidiaries, as applicable, to protest any Lien (other than any such Lien that
secures the Obligations), taxes (other than payroll taxes or taxes that are the
subject of a United States federal tax lien), or rental payment, provided that
(a) a reserve with respect to such obligation is established on the Books in
such amount as is required under GAAP, (b) any such protest is instituted
promptly and prosecuted diligently by Borrowers, or their Subsidiaries, as
applicable, in good faith, and (c) Agent is satisfied in its Permitted
Discretion that, while any such protest is pending, there will be no impairment
of the enforceability, validity, or priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate principal amount outstanding at any one time not in excess of
$800,000.
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than Real
Property.
"PPSA" means the Personal Property Security Act (Ontario), the
Personal Property Security Act (Nova Scotia), the Civil Code of Quebec and any
other applicable
24
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.
"PPSA Filings" means filings required to be made with respect to the
transactions contemplated hereby under the PPSA.
"Projections" means each Borrower's forecasted (a) balance sheets,
(b) profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with each Borrower's historical financial statements, together
with appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means, as of any date of determination:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (i) prior to the Revolver Commitments being reduced to zero, the
percentage obtained by dividing (A) such Lender's Revolver Commitment by (B) the
aggregate Revolver Commitments of all Lenders, and (ii) from and after the time
that the Revolver Commitments have been terminated or reduced to zero, the
percentage obtained by dividing (A) the aggregate principal amount of such
Lender's Advances, by (B) the aggregate principal amount of all Advances,
(b) with respect to a Lender's obligation to participate in Letters
of Credit, to reimburse the Issuing Lender, and to receive payments of fees with
respect thereto, (i) prior to the Revolver Commitment being reduced to zero, the
percentage obtained by dividing (A) such Lender's Revolver Commitment by (B) the
aggregate Revolver Commitments of all Lenders, and (ii) from and after the time
that the Revolver Commitments have been terminated or reduced to zero, the
percentage obtained by dividing (A) the aggregate principal amount of such
Lender's Advances by (B) the aggregate principal amount of all Advances,
(c) with respect to a Lender's obligation to make the Term Loan and
to receive payments of interest, fees and principal with respect thereto, (i)
prior to the making of the Term Loan, the percentage obtained by dividing (A)
such Lender's Term Loan Commitment by (B) the aggregate amount of all Lenders'
Term Loan Commitments, and (ii) from and after the making of the Term Loan, the
percentage obtained by dividing (A) the principal amount of such Lender's
portion of the Term Loan (inclusive of the Term Loan PIK Amount theretofore so
added) by (B) the principal amount of the Term Loan (inclusive of the Term Loan
PIK Amount theretofore so added),
(d) with respect to a Lender's indemnification obligations arising
under Section 16.7), (i) so long as the Revolver Commitments have not been
terminated or reduced to zero the percentage obtained by dividing (A) such
Lender's Revolver Commitment plus the unpaid principal amount of such Lender's
portion of the Term Loan by (B) the aggregate amount of Revolver Commitments of
all Lenders plus the unpaid principal amount of the Term Loan or (ii) in the
event the Revolver Commitments have been terminated or reduced to zero, the
percentage obtained by dividing (A) the principal amount of such Lender's
Advances plus such Lender's Risk Participation Liability with respect to
outstanding Letter of Credit plus the unpaid
25
principal amount of such Lender's portion of the Term Loan (inclusive of the
Term Loan PIK Amount theretofore so added) by (B) the principal amount of all
outstanding Advances plus all Lenders' Risk Participation Liability with respect
to outstanding Letters of Credit plus the unpaid principal amount of the Term
Loan (inclusive of the Term Loan PIK Amount theretofore so added), and
(e) with respect to all other matters as to a particular Lender, the
percentage obtained by dividing (i) such Lender's Revolver Commitment,
notwithstanding any termination of such Revolver Commitment, plus such Lender's
Term Loan Commitment, notwithstanding any termination of such Term Loan
Commitment, by (ii) the aggregate amount of Revolver Commitments of all Lenders,
notwithstanding any termination of any Revolver Commitment, plus the aggregate
amount of Term Loan Commitments of all Lenders, notwithstanding any termination
of any Term Loan Commitment.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Purchaser" means Easy Gardener Products, Ltd., a Texas limited
partnership.
"Purchaser Loan Agreement" means a certain loan and security
agreement to be entered into by and between the Lender Group and Purchaser, and
including all other documents related thereto, each in form and substance
satisfactory to Agent.
"Purchaser Loan Side Letter" means that certain side letter entered
into by and among the Purchaser, Ableco and Agent setting forth the terms of the
Purchaser Loan Agreement, in form and substance satisfactory to Agent.
"Rating Agency" has the meaning set forth in Section 2.16.
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by any Borrower or its Subsidiaries and the
improvements thereto.
"Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Register" has the meaning set forth in Section 14.1(h).
"Registered Loan" has the meaning set forth in Section 2.15.
"Registered Note" has the meaning set forth in Section 2.15.
"Related Fund" has the meaning ascribed thereto in the definition of
"Eligible Transferee".
26
"Remaining Seasonal Overadvance Period" means the period of time
commencing on June 1, 2003 and ending January 31, 2004 and the period of time
commencing June 1 and ending January 31 of each calendar year thereafter.
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC ss. 9601.
"Replacement Lender" has the meaning set forth in Section 15.2(a).
"Replacement Notice" has the meaning set forth in Section 2.14.
"Report" has the meaning set forth in Section 16.17.
"Required Availability" means Excess Availability and unrestricted
cash and Cash Equivalents in an amount of not less than $3,000,000.
"Required Lenders" means, at any time, Lenders whose aggregate Pro
Rata Shares (calculated under clause (e) of the definition of Pro Rata Shares)
equal or exceed 60%.
"Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
"Revolver Usage" means, as of any date of determination, the sum of
(a) the then extant amount of outstanding Advances, plus (b) the then extant
amount of the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of Credit,
all reimbursement obligations of Borrowers to the Issuing Lender with respect to
an L/C Undertaking, consisting of (a) the amount available to be drawn or which
may become available to be drawn, (b) all amounts that have been paid by the
Issuing Lender to the Underlying Issuer to the extent not reimbursed by
Borrowers, whether by the making of an Advance or otherwise, and (c) all accrued
and unpaid interest, fees, and expenses payable with respect thereto.
27
"Seasonal Overadvance Amount" means (a) during the Initial Seasonal
Overadvance Period, an amount equal to $3,500,000, (b) during the Remaining
Seasonal Overadvance Period, an amount equal to $2,000,000 and (c) during the In
Season Period, an amount equal to $0.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
"Securities Account" means a "securities account" as that term is
defined in the Code.
"Securitization" has the meaning set forth in Section 2.16.
"Securitization Parties" has the meaning set forth in Section 2.16.
"Settlement" has the meaning set forth in Section 2.3(f)(a).
"Settlement Date" has the meaning set forth in Section 2.3(f)(a).
"Solvent" means, with respect to any Person on a particular date,
that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"Stock" means all shares, options, warrants, interests, partnership
interests, membership interests, participations, or other equivalents
(regardless of how designated) of or in a Person, whether voting or nonvoting,
including common stock, preferred stock, or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the SEC under the Exchange Act).
"Stock Pledge Agreements" means Parent Stock Pledge Agreement, Easy
Gardener Stock Pledge Agreement and Xxxxxxxxx Group Stock Pledge Agreement.
"Subordinated Junior Debt Documents" shall mean the Junior
Subordinated Indenture governing the 9.4% Junior Subordinated Debentures Due
2028 issued by Parent to its subsidiary, U.S. Home & Garden Trust I, a Delaware
business trust.
"Subordinated Indebtedness" shall mean the Indebtedness of Parent,
as evidenced by the Subordinated Junior Debt Documents.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
Notwithstanding the foregoing, the Excluded Subsidiaries shall be deemed not to
be Subsidiaries of Parent or Borrowers for any purpose under this Agreement
(including the definitions herein).
28
"Swing Lender" means Foothill or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(a).
"Taxes" has the meaning set forth in Section 16.11(e).
"Term Loan" has the meaning set forth in Section 2.2.
"Term Loan Amount" means $12,000,000.
"Term Loan Commitment" means, with respect to each Lender, its Term
Loan Commitment, and, with respect to all Lenders, their Term Loan Commitments,
in each case as such Dollar amounts are set forth beside such Lender's name
under the applicable heading on Schedule C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Term Loan PIK Amount" means, as of any date of determination, the
amount of all interest accrued with respect to the Term Loan that has been
paid-in-kind by being added to the balance thereof in accordance with Section
2.6(a)(iii).
"Total Commitment" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Total Senior Funded Debt" means, as of any month end, the Revolver
Usage plus the then outstanding amount (including the Term Loan PIK Amount) of
the Term Loan.
"Trademark Security Agreement" means a trademark security agreement
executed and delivered by each Borrower and Agent, the form and substance of
which is satisfactory to Agent.
"Triggering Event" means, if as of any month end, the ratio of Total
Senior Funded Debt, as of such month end, to EBITDA for the 12 month period
ended as of such month end, exceeds 3.00 to 1.00.
"Triggering Event Percentage" means 0.00 percentage points;
provided, however, that if a Triggering Event has occurred, then as of the first
day of the calendar month immediately following the occurrence of such
Triggering Event and continuing through the last day of the calendar month, if
ever, in which such Triggering Event no longer is continuing, the Triggering
Event Percentage shall be 2.50 percentage points
"Trust" means U.S. Home & Garden Trust I, a Delaware business trust.
29
"Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Xxxxxxxxx Group" means Xxxxxxxxx Consumer Products Group, Inc., a
Delaware corporation, and wholly-owned subsidiary of Easy Gardener.
"Xxxxxxxxx Group Stock Pledge Agreement" means a stock pledge
agreement, in form and substance satisfactory to Agent, executed and delivered
by Xxxxxxxxx Group to Agent with respect to the pledge of the Stock of Xxxxxxxxx
Products owned by Xxxxxxxxx Group.
"Xxxxxxxxx Products" means Xxxxxxxxx Consumer Products, Inc., a
Delaware corporation, and wholly-owned subsidiary of Xxxxxxxxx Group.
"Weed Wizard" means Weed Wizard Acquisition Corp., a Delaware
corporation.
"Weed Wizard Litigation" means, collectively, (a) Case No.
2:00-CV-0129, in the United States District Court, Northern District of Georgia,
Gainesville Division, entitled Weed Wizard Acquisition Corp. v. A.A.B.B., Inc.,
and (b) that certain claim brought by the United States Department of Justice
and the Consumer Product Safety Commission ("CPSC") in the District of Maryland
against Weed Wizard and one or more Borrowers for civil penalties based on
allegations of failure to inform CPSC of defective products that create product
hazards and create unreasonable risks of serious injury.
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a
national banking association.
1.2 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Parent" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Parent and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document referred to in this Agreement or such other Loan Document,
30
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to any Person
shall be construed to include such Person's successors and assigns. Any
requirement of a writing contained herein or in the other Loan Documents shall
be satisfied by the transmission of a Record and any Record transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.
1.5 Schedules and Exhibits. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
to Borrowers in an amount at any one time outstanding not to exceed such
Lender's Pro Rata Share of an amount equal to the lesser of (i) the Maximum
Revolver Amount less the Letter of Credit Usage, or (ii) the Borrowing Base less
the Letter of Credit Usage and the aggregate amount of the Inventory Reserves,
plus the Seasonal Overadvance Amount. For purposes of this Agreement, "Borrowing
Base," as of any date of determination, shall mean the result of:
(x) the lesser of
(i) 85% of the amount of Eligible Accounts (in the
case of Eligible Canadian Accounts, determined by
reference to the Dollar Equivalent thereof), less the
amount, if any, of the Dilution Reserve, and
(ii) an amount equal to the Applicable Collections
Amount, plus
(y) the lowest of
(i) $10,000,000,
(ii) 60% of the cost of Eligible Inventory,
(iii) 85% times the then extant Net Recovery
Percentage times the book value of Borrowers' Inventory,
and
31
(iv) the Applicable Revolver/Inventory Percentage
of the amount of credit availability created by clause
(x) above, minus
(z) the sum of (i) the Bank Product Reserve and (ii) the
aggregate amount of all other reserves, if any,
established by Agent under Section 2.1(b).
(b) Anything to the contrary in this Section 2.1 notwithstanding,
Agent shall have the right to establish reserves in such amounts, and with
respect to such matters, as Agent in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including reserves with
respect to (i) sums that Borrowers are required to pay (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and has failed to pay under any Section
of this Agreement or any other Loan Document, and (ii) amounts owing by
Borrowers to any Person to the extent secured by a Lien on, or trust over, any
of the Collateral (other than any existing Permitted Lien set forth on Schedule
P-2 which is specifically identified thereon as entitled to have priority over
the Agent's Liens and Liens securing Permitted Purchase Money Indebtedness),
which Lien or trust, in the Permitted Discretion of Agent likely would have a
priority superior to the Agent's Liens (such as Liens or trusts in favor of
landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes
where given priority under applicable law) in and to such item of the
Collateral. In addition to the foregoing, and without limiting Agent's rights
under Section 4.6, Agent shall have the right to have the Inventory reappraised
by a qualified appraisal company selected by Agent from time to time after the
Closing Date for the purpose of redetermining the Net Liquidation Percentage of
the Eligible Inventory portion of the Collateral and, as a result, redetermining
the Borrowing Base; provided, however, that if no Event of Default has occurred
and is continuing, Borrowers shall not be obligated to pay for the costs and
expenses associated with more than 2 appraisals of Inventory during any 12
consecutive month period.
(c) The Lenders with Revolver Commitments shall have no obligation
to make additional Advances hereunder to the extent such additional Advances
would cause the Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
2.2 Term Loan. Subject to the terms and conditions of this Agreement, on
the Closing Date each Lender with a Term Loan Commitment agrees (severally, not
jointly or jointly and severally) to make term loans (collectively, the "Term
Loan") to Borrowers in an amount equal to such Lender's Pro Rata Share of the
Term Loan Amount. The outstanding unpaid principal balance of the Term Loan may
be prepaid, without penalty or premium, only once during any 90 day period, so
long as no Event of Default has occurred and is continuing or would result
therefrom and Borrowers have on the date of such prepayment Excess Availability
of no less than (x) $3,000,000 during the In Season Period, (y) $6,500,000
during the Initial Seasonal Overadvance Period, or (z) $5,000,000 during the
Remaining Seasonal Overadvance Period, as applicable, after giving effect to
each such prepayment; provided, however, that the
32
foregoing conditions set forth in this sentence shall have no application with
respect to any prepayment that is otherwise required by this Agreement. Each
such prepayment shall be accompanied by all accrued and unpaid interest on the
principal amount of the Term Loan so prepaid. The outstanding unpaid principal
balance and all accrued and unpaid interest thereon then outstanding under the
Term Loan shall be due and payable on the earlier to occur of (a) October 30,
2005, and (b) the date when this Agreement is terminated, whether by its terms,
by prepayment, or by acceleration. All amounts outstanding under the Term Loan
shall constitute Obligations.
2.3 Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 10:00 a.m. (California time) on
the Business Day that is the requested Funding Date in the case of a request for
an Advance or the Term Loan specifying (i) the amount of such Borrowing, and
(ii) the requested Funding Date, which shall be a Business Day; provided,
however, that in the case of a request for Swing Loan in an amount of $2,500,000
or less, such notice will be timely received if it is received by Agent no later
than 10:00 a.m. (California time) on the Business Day that is the requested
Funding Date) specifying (i) the amount of such Borrowing, and (ii) the
requested Funding Date, which shall be a Business Day. At Agent's election, in
lieu of delivering the above-described written request, any Authorized Person
may give Agent telephonic notice of such request by the required time, with such
telephonic notice to be confirmed in writing within 24 hours of the giving of
such notice.
(b) Agent's Election. Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion, (i)
to have the terms of Section 2.3(c) apply to such requested Borrowing, or (ii)
if the Borrowing is for an Advance, to request Swing Lender to make a Swing Loan
pursuant to the terms of Section 2.3(d) in the amount of the requested
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to
have the terms of Section 2.3(c) apply to such requested Borrowing.
(c) Making of Advances.
(a) In the event that Agent shall elect to have the terms of this
Section 2.3(c) apply to a requested Borrowing as described in Section 2.3(b),
then promptly after receipt of a request for a Borrowing pursuant to Section
2.3(a), Agent shall notify the Lenders, not later than 1:00 p.m. (California
time) on the Business Day immediately preceding the Funding Date applicable
thereto, by telecopy, telephone, or other similar form of transmission, of the
requested Borrowing. Each Lender shall make the amount of such Lender's Pro Rata
Share of the requested Borrowing available to Agent in immediately available
funds, to Agent's Account, not later than 10:00 a.m. (California time) on the
Funding Date applicable thereto. After Agent's receipt of the proceeds of such
Advances (or the Term Loan, as applicable), upon satisfaction of the applicable
conditions precedent set forth in Section 3 hereof, Agent shall make the
proceeds thereof available to Administrative Borrower on the applicable Funding
Date by transferring immediately available funds equal to such proceeds received
by Agent to Administrative Borrower's Designated Account; provided, however,
that, subject to the provisions of Section
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2.3(i), Agent shall not request any Lender to make, and no Lender shall have the
obligation to make, any Advance (or its portion of the Term Loan) if Agent shall
have actual knowledge that (1) one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the requested Funding
Date for the applicable Borrowing unless such condition has been waived, or (2)
the requested Borrowing would exceed the Availability on such Funding Date.
(b) Unless Agent receives notice from a Lender on or prior to the
Closing Date or, with respect to any Borrowing after the Closing Date, at least
1 Business Day prior to the date of such Borrowing, that such Lender will not
make available as and when required hereunder to Agent for the account of
Borrowers the amount of that Lender's Pro Rata Share of the Borrowing, Agent may
assume that each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but shall not be
so required), in reliance upon such assumption, make available to Borrowers on
such date a corresponding amount. If and to the extent any Lender shall not have
made its full amount available to Agent in immediately available funds and Agent
in such circumstances has made available to Borrowers such amount, that Lender
shall on the Business Day following such Funding Date make such amount available
to Agent, together with interest at the Defaulting Lender Rate for each day
during such period. A notice submitted by Agent to any Lender with respect to
amounts owing under this subsection shall be conclusive, absent manifest error.
If such amount is so made available, such payment to Agent shall constitute such
Lender's Advance on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to Agent on the Business Day following the
Funding Date, Agent will notify Administrative Borrower of such failure to fund
and, upon demand by Agent, Borrowers shall pay such amount to Agent for Agent's
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Advances composing such Borrowing. The failure of any Lender to make
any Advance on any Funding Date shall not relieve any other Lender of any
obligation hereunder to make an Advance on such Funding Date, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on any Funding Date.
(c) Agent shall not be obligated to transfer to a Defaulting Lender
any payments made by Borrowers to Agent for the Defaulting Lender's benefit,
and, in the absence of such transfer to the Defaulting Lender, Agent shall
transfer any such payments to each other non-Defaulting Lender member of the
Lender Group ratably in accordance with their Commitments (but only to the
extent that such Defaulting Lender's Advance was funded by the other members of
the Lender Group) or, if so directed by Administrative Borrower and if no
Default or Event of Default had occurred and is continuing (and to the extent
such Defaulting Lender's Advance was not funded by the Lender Group), retain
same to be re-advanced to Borrowers as if such Defaulting Lender had made
Advances to Borrowers. Subject to the foregoing, Agent may hold and, in its
Permitted Discretion, re-lend to Borrowers for the account of such Defaulting
Lender the amount of all such payments received and retained by it for the
account of such Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents, such Defaulting Lender
shall be deemed not to be a "Lender" and such Lender's Commitment shall be
deemed to be zero. This Section shall remain effective with respect to such
Lender until (x) the Obligations under this Agreement shall have been declared
or shall have become immediately due and payable, (y) the non-Defaulting
Lenders, Agent, and Administrative Borrower shall have waived such Defaulting
Lender's
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default in writing, or (z) the Defaulting Lender makes its Pro Rata Share of the
applicable Advance and pays to Agent all amounts owing by Defaulting Lender in
respect thereof. The operation of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, to relieve or excuse
the performance by such Defaulting Lender or any other Lender of its duties and
obligations hereunder, or to relieve or excuse the performance by Borrowers of
their duties and obligations hereunder to Agent or to the Lenders other than
such Defaulting Lender. Any such failure to fund by any Defaulting Lender shall
constitute a material breach by such Defaulting Lender of this Agreement and
shall entitle Administrative Borrower at its option, upon written notice to
Agent, to arrange for a substitute Lender to assume the Commitment of such
Defaulting Lender, such substitute Lender to be an Eligible Transferee. In
connection with the arrangement of such a substitute Lender, the Defaulting
Lender shall have no right to refuse to be replaced hereunder, and agrees to
execute and deliver a completed form of Assignment and Acceptance Agreement in
favor of the substitute Lender (and agrees that it shall be deemed to have
executed and delivered such document if it fails to do so) subject only to being
repaid its share of the outstanding Obligations (other than Bank Product
Obligations but including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind whatsoever;
provided further, however, that any such assumption of the Commitment of such
Defaulting Lender shall not be deemed to constitute a waiver of any of the
Lender Groups' or Borrowers' rights or remedies against any such Defaulting
Lender arising out of or in relation to such failure to fund.
(d) Making of Swing Loans.
(a) In the event Agent shall elect, with the consent of Swing
Lender, as a Lender, to have the terms of this Section 2.3(d) apply to a
requested Borrowing as described in Section 2.3(b), Swing Lender as a Lender
shall make such Advance in the amount of such Borrowing (any such Advance made
solely by Swing Lender as a Lender pursuant to this Section 2.3(d) being
referred to as a "Swing Loan" and such Advances being referred to collectively
as "Swing Loans") available to Borrowers on the Funding Date applicable thereto
by transferring immediately available funds to Administrative Borrower's
Designated Account. Each Swing Loan is an Advance hereunder and shall be subject
to all the terms and conditions applicable to other Advances, except that no
such Swing Loan shall be eligible for the LIBOR Option and all payments on any
Swing Loan shall be payable to Swing Lender as a Lender solely for its own
account (and for the account of the holder of any participation interest with
respect to such Swing Loan). Subject to the provisions of Section 2.3(i), Agent
shall not request Swing Lender as a Lender to make, and Swing Lender as a Lender
shall not make, any Swing Loan if Agent has actual knowledge that (i) one or
more of the applicable conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (ii) the requested Borrowing would exceed the
Availability on such Funding Date. Swing Lender as a Lender shall not otherwise
be required to determine whether the applicable conditions precedent set forth
in Section 3 have been satisfied on the Funding Date applicable thereto prior to
making, in its sole discretion, any Swing Loan.
(b) The Swing Loans shall be secured by the Agent's Liens, shall
constitute Advances and Obligations hereunder, and shall bear interest at the
rate applicable from time to time to Advances that are Base Rate Loans.
35
(e) Agent Advances.
(a) Agent hereby is authorized by Borrowers and the Lenders, from
time to time in Agent's sole discretion, (1) after the occurrence and during the
continuance of a Default or an Event of Default, or (2) at any time that any of
the other applicable conditions precedent set forth in Section 3 have not been
satisfied, to make Advances to Borrowers on behalf of the Lenders that Agent, in
its Permitted Discretion deems necessary or desirable (A) to preserve or protect
the Borrowing Base Collateral, or any portion thereof, or (B) to pay any other
amount chargeable to Borrowers pursuant to the terms of this Agreement,
including Lender Group Expenses and the costs, fees, and expenses described in
Section 10 (any of the Advances described in this Section 2.3(e) shall be
referred to as "Agent Advances"). Each Agent Advance is an Advance hereunder and
shall be subject to all the terms and conditions applicable to other Advances,
except that no such Agent Advance shall be eligible for the LIBOR Option and all
payments thereon shall be payable to Agent solely for its own account (and for
the account of the holder of any participation interest with respect to such
Agent Advance).
(b) The Agent Advances shall be repayable on demand and secured by
the Agent's Liens granted to Agent under the Loan Documents, shall constitute
Advances and Obligations hereunder, and shall bear interest at the rate
applicable from time to time to Advances that are Base Rate Loans.
(f) Settlement. It is agreed that each Lender's funded portion of
the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(a) Agent shall request settlement ("Settlement") with the Lenders
on a weekly basis, or on a more frequent basis if so determined by Agent, (1) on
behalf of Swing Lender, with respect to each outstanding Swing Loan, (2) for
itself, with respect to each Agent Advance, and (3) with respect to Collections
received, as to each by notifying the Lenders by telecopy, telephone, or other
similar form of transmission, of such requested Settlement, no later than 2:00
p.m. (California time) on the Business Day immediately prior to the date of such
requested Settlement (the date of such requested Settlement being the
"Settlement Date"). Such notice of a Settlement Date shall include a summary
statement of the amount of outstanding Advances, Swing Loans, and Agent Advances
for the period since the prior Settlement Date. Subject to the terms and
conditions contained herein (including Section 2.3(c)(c)): (y) if a Lender's
balance of the Advances, Swing Loans, and Agent Advances exceeds such Lender's
Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of a
Settlement Date, then Agent shall, by no later than 12:00 p.m. (California time)
on the Settlement Date, transfer in immediately available funds to the account
of such Lender as such Lender may designate, an amount such that each such
Lender shall, upon receipt of such amount, have as of the Settlement Date, its
Pro Rata Share of the Advances, Swing Loans, and Agent Advances, and (z) if a
Lender's balance of the Advances, Swing Loans, and Agent Advances is less than
such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent Advances as
of a Settlement Date,
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such Lender shall no later than 12:00 p.m. (California time) on the Settlement
Date transfer in immediately available funds to the Agent's Account, an amount
such that each such Lender shall, upon transfer of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances, Swing Loans, and Agent
Advances. Such amounts made available to Agent under clause (z) of the
immediately preceding sentence shall be applied against the amounts of the
applicable Swing Loan or Agent Advance and, together with the portion of such
Swing Loan or Agent Advance representing Swing Lender's Pro Rata Share thereof,
shall constitute Advances of such Lenders. If any such amount is not made
available to Agent by any Lender on the Settlement Date applicable thereto to
the extent required by the terms hereof, Agent shall be entitled to recover for
its account such amount on demand from such Lender together with interest
thereon at the Defaulting Lender Rate.
(b) In determining whether a Lender's balance of the Advances, Swing
Loans, and Agent Advances is less than, equal to, or greater than such Lender's
Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of a
Settlement Date, Agent shall, as part of the relevant Settlement, apply to such
balance the portion of payments actually received in good funds by Agent with
respect to principal, interest, fees payable by Borrowers and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a net amount
is owed to any such Lender after such application, such net amount shall be
distributed by Agent to that Lender as part of such next Settlement.
(c) Between Settlement Dates, Agent, to the extent no Agent Advances
or Swing Loans are outstanding, may pay over to Swing Lender any payments
received by Agent, that in accordance with the terms of this Agreement would be
applied to the reduction of the Advances, for application to Swing Lender's Pro
Rata Share of the Advances. If, as of any Settlement Date, Collections received
since the then immediately preceding Settlement Date have been applied to Swing
Lender's Pro Rata Share of the Advances other than to Swing Loans, as provided
for in the previous sentence, Swing Lender shall pay to Agent for the accounts
of the Lenders, and Agent shall pay to the Lenders, to be applied to the
outstanding Advances of such Lenders, an amount such that each Lender shall,
upon receipt of such amount, have, as of such Settlement Date, its Pro Rata
Share of the Advances. During the period between Settlement Dates, Swing Lender
with respect to Swing Loans, Agent with respect to Agent Advances, and each
Lender (subject to the effect of letter agreements between Agent and individual
Lenders) with respect to the Advances other than Swing Loans and Agent Advances,
shall be entitled to interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by Swing Lender, Agent, or the
Lenders, as applicable.
(g) Notation. Agent shall record on its books the principal amount
of the Advances owing to each Lender, including the Swing Loans owing to Swing
Lender, and Agent Advances owing to Agent, and the interests therein of each
Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) Lenders' Failure to Perform. All Advances (other than Swing
Loans and Agent Advances) shall be made by the Lenders contemporaneously and in
accordance with
37
their Pro Rata Shares. It is understood that (i) no Lender shall be responsible
for any failure by any other Lender to perform its obligation to make any
Advance (or other extension of credit) hereunder, nor shall any Commitment of
any Lender be increased or decreased as a result of any failure by any other
Lender to perform its obligations hereunder, and (ii) no failure by any Lender
to perform its obligations hereunder shall excuse any other Lender from its
obligations hereunder.
(i) Optional Overadvances. Any contrary provision of this Agreement
notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as
applicable, and Agent or Swing Lender, as applicable, may, but is not obligated
to, knowingly and intentionally, continue to make Advances (including Swing
Loans) to Borrowers notwithstanding that an Overadvance exists or thereby would
be created, so long as (i) after giving effect to such Advances (including a
Swing Loan), the Revolver Usage does not exceed the Borrowing Base by more than
$2,300,000, (ii) after giving effect to such Advances (including a Swing Loan),
the outstanding Revolver Usage (except for and excluding amounts charged to the
Loan Account for interest, fees, or Lender Group Expenses) does not exceed the
Maximum Revolver Amount, (iii) after giving effect to any such Overadvance, the
aggregate amount of outstanding optional Overadvances made by Agent or Swing
Lender to Borrowers pursuant to this Section 2.3(i) shall not exceed the result
of (A) $2,300,000 minus (B) the aggregate amount of Agent Advances outstanding
under Section 2.3(e), and (iv) at the time of the making of any such Advance
(including a Swing Loan), Agent does not believe, in good faith, that the
Overadvance created by such Advance will be outstanding for more than 90 days.
The foregoing provisions are for the exclusive benefit of Agent, Swing Lender,
and the Lenders and are not intended to benefit Borrowers in any way. The
Advances and Swing Loans, as applicable, that are made pursuant to this Section
2.3(i) shall be subject to the same terms and conditions as any other Advance or
Swing Loan, as applicable, except that they shall not be eligible for the LIBOR
Option and the rate of interest applicable thereto shall be the rate applicable
to Advances that are Base Rate Loans under Section 2.6(c) hereof without regard
to the presence or absence of a Default or Event of Default.
(a) In the event Agent obtains actual knowledge that the Revolver
Usage exceeds the amounts permitted by the preceding paragraph, regardless of
the amount of, or reason for, such excess, Agent shall notify Lenders as soon as
practicable (and prior to making any (or any additional) intentional
Overadvances (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) unless Agent determines that prior
notice would result in imminent harm to the Collateral or its value), and the
Lenders with Revolver Commitments thereupon shall, together with Agent, jointly
determine the terms of arrangements that shall be implemented with Borrowers
intended to reduce, within a reasonable time, the outstanding principal amount
of the Advances to Borrowers to an amount permitted by the preceding paragraph.
In the event Agent or any Lender disagrees over the terms of reduction or
repayment of any Overadvance, the terms of reduction or repayment thereof shall
be implemented according to the determination of the Required Lenders.
(b) Each Lender with a Revolver Commitment shall be obligated to
settle with Agent as provided in Section 2.3(f) for the amount of such Lender's
Pro Rata Share of any unintentional Overadvances
38
by Agent reported to such Lender, any intentional Overadvances made as permitted
under this Section 2.3(i), and any Overadvances resulting from the charging to
the Loan Account of interest, fees, or Lender Group Expenses.
2.4 Payments.
(a) Payments by Borrowers.
(a) Except as otherwise expressly provided herein, all payments by
Borrowers shall be made to Agent's Account for the account of the Lender Group
and shall be made in immediately available funds, no later than 11:00 a.m.
(California time), on the date specified herein. Any payment received by Agent
later than 11:00 a.m. (California time) shall be deemed to have been received on
the following Business Day and any applicable interest or fee shall continue to
accrue until such following Business Day.
(b) Unless Agent receives notice from Administrative Borrower prior
to the date on which any payment is due to the Lenders that Borrowers will not
make such payment in full as and when required, Agent may assume that Borrowers
have made (or will make) such payment in full to Agent on such date in
immediately available funds and Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent Borrowers
do not make such payment in full to Agent on the date when due, each Lender
severally shall repay to Agent on demand such amount distributed to such Lender,
together with interest thereon at the Defaulting Lender Rate for each day from
the date such amount is distributed to such Lender until the date repaid.
(b) Apportionment and Application of Payments.
(a) Except as otherwise provided with respect to Defaulting Lenders
and except as otherwise provided in the Loan Documents (including letter
agreements between Agent and individual Lenders), aggregate principal and
interest payments shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Obligations to which such payments relate
held by each Lender) and payments of fees and expenses (other than fees or
expenses that are for Agent's separate account, after giving effect to any
letter agreements between Agent and individual Lenders) shall be apportioned
ratably among the Lenders having a Pro Rata Share of the type of Commitment or
Obligation to which a particular fee relates. All payments shall be remitted to
Agent and all such payments, and all proceeds of Collateral received by Agent,
shall be applied as follows:
(A) first, so long as no Event of Default has occurred
and is continuing, to pay any Lender Group Expenses then due
to Agent under the Loan Documents, until paid in full,
(B) second, so long as no Event of Default has occurred
and is continuing, to pay any Lender Group Expenses then due
to the Lenders under the Loan Documents, on a ratable basis,
until paid in full,
(C) third, so long as no Event of Default has occurred
and is continuing, to pay any fees then due to Agent (for its
separate account,
39
after giving effect to any letter agreements between Agent and
the individual Lenders) under the Loan Documents, until paid
in full,
(D) fourth, so long as no Event of Default has occurred
and is continuing, to pay any fees then due to any or all of
the Lenders (after giving effect to any letter agreements
between Agent and individual Lenders) under the Loan
Documents, on a ratable basis, until paid in full,
(E) fifth, so long as no Event of Default has occurred
and is continuing, to pay interest due in respect of all Agent
Advances, until paid in full,
(F) sixth, so long as no Event of Default has occurred
and is continuing, ratably to pay interest due in respect of
the Advances (other than Agent Advances), and the Swing Loans,
until paid in full,
(G) seventh, so long as no Event of Default has occurred
and is continuing, to pay interest due in respect of the Term
Loan, until paid in full,
(H) eighth, so long as no Event of Default has occurred
and is continuing, to pay the principal of all Agent Advances,
until paid in full,
(I) ninth, so long as no Event of Default has occurred
and is continuing, to pay the principal of all Swing Loans,
until paid in full,
(J) tenth, so long as no Event of Default has occurred
and is continuing and Borrower is required to make a mandatory
prepayment to the Term Loan pursuant to Section 2.4(c), to pay
the principal of the Term Loan in the amount then due under
Section 2.4(c),
(K) eleventh, so long as no Event of Default has
occurred and is continuing, to pay the principal of all
Advances, until paid in full,
(L) twelfth, so long as no Event of Default has occurred
and is continuing, to pay all principal amounts then due and
payable with respect to the Term Loan, until paid in full,
(M) thirteenth, so long as no Event of Default has
occurred and is continuing, and at Agent's election (which
election Agent agrees will not be made if an Overadvance would
be created thereby), to pay amounts then due and owing by
Borrowers or their Subsidiaries in respect of Bank Products,
until paid in full,
(N) fourteenth, so long as no Event of Default has
occurred and is continuing, to pay any other Obligations,
until paid in full,
40
(O) fifteenth, so long as no Event of Default has
occurred and is continuing, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto
under applicable law,
(P) sixteenth, if an Event of Default has occurred and
is continuing, to pay any Lender Group Expenses and fees due
to Agent (for its separate account, after giving effect to any
letter agreements between Agent and the individual Lenders)
under the Loan Documents, until paid in full,
(Q) seventeenth, if an Event of Default has occurred and
is continuing, to pay any Lender Group Expenses and fees
(other than the Applicable Prepayment Premium) due to any or
all of the Lenders (after giving effect to any letter
agreements between Agent and individual Lenders), under the
Loan Documents, on a ratable basis, until paid in full,
(R) eighteenth, if an Event of Default has occurred and
is continuing, ratably to pay interest due in respect of all
Agent Advances, Advances and Swing Loans, until paid in full,
(S) nineteenth, if an Event of Default has occurred and
is continuing, ratably to pay the principal of all Agent
Advances, Advances and Swing Loans, until paid in full,
(T) twentieth, if an Event of Default has occurred and
is continuing, ratably to Agent, to be held by Agent, for the
benefit of Xxxxx Fargo or its Affiliates, as applicable, as
cash collateral in an amount up to the amount of the Bank
Product Reserve established at the time of the establishment
of the Bank Product, and not in contemplation of the subject
Event of Default until Borrowers' and their Subsidiaries'
obligations in respect of the then extant Bank Products have
been paid in full or the cash collateral amount has been
exhausted,
(U) twenty-first, if an Event of Default has occurred
and is continuing, to Agent, to be held by Agent, for the
ratable benefit of Issuing Lender and those Lenders having a
Revolver Commitment, as cash collateral in an amount up to
105% of the then extant Letter of Credit Usage, until paid in
full,
(V) twenty-second, if an Event of Default has occurred
and is continuing, to pay any fees due in connection with the
Term Loan (after giving effect to any letter agreements
between Agent and individual Lenders), under the Loan
Documents, on a ratable basis, until paid in full,
(W) twenty-third, if an Event of Default has occurred
and is continuing, to pay interest due in respect of the Term
Loan, until paid in full,
41
(X) twenty-fourth, if an Event of Default has occurred
and is continuing, to pay the outstanding principal balance of
the Term Loan, until the Term Loan is paid in full,
(Y) twenty-fifth, if an Event of Default has occurred
and is continuing, to pay Bank Product Obligations, until paid
in full,
(Z) twenty-sixth, if an Event of Default has occurred
and is continuing to pay the Applicable Prepayment Premium,
until paid in full,
(AA) twenty-seventh, if an Event of Default has occurred
and is continuing, to pay any other Obligations, until paid in
full, and
(BB) twenty-eighth, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto
under applicable law.
(b) Agent promptly shall distribute to each Lender, pursuant to the
applicable wire instructions received from each Lender in writing, such funds as
it may be entitled to receive, subject to a Settlement delay as provided in
Section 2.3(f).
(c) In each instance, so long as no Event of Default has occurred
and is continuing, Section 2.4(b) shall not be deemed to apply to (A) any
mandatory prepayment of Obligations pursuant to Section 2.4(c), which payment
shall be applied in accordance with the provisions thereof, or (B) any payment
by Borrowers specified by Borrowers to be for the payment of specific
Obligations then due and payable (or prepayable) under any provision of this
Agreement.
(d) For purposes of the foregoing, "paid in full" means payment of
all amounts owing under the Loan Documents according to the terms thereof,
including loan fees, service fees, professional fees, interest (and specifically
including interest accrued after the commencement of any Insolvency Proceeding),
default interest, interest on interest, and expense reimbursements, whether or
not the same would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.
(e) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any other Loan
Document, it is the intention of the parties hereto that such priority
provisions in such documents shall be read together and construed, to the
fullest extent possible, to be in concert with each other. In the event of any
actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms
and provisions of this Section 2.4 shall control and govern.
(c) Mandatory Prepayments.
(a) Immediately upon any disposition of assets by any Borrower or
any Subsidiary of any Borrower (other than (y) Permitted Dispositions set forth
in clauses (c), (d), (e) and (f) of the definition thereof, and (z) the first
$10,000 of net cash proceeds of Permitted Dispositions set forth in clauses (a)
and (b) occurring during any fiscal year), Borrowers shall prepay the
outstanding principal amount of the Term Loan (or, if the Term Loan has been
paid in
42
full, the Advances) in an amount equal to 100% of the net cash proceeds
(which calculation of net cash proceeds shall include provision for (A) the
actual and reasonable costs and expenses incurred in connection with such
disposition, (B) any anticipated income tax liability resulting from such
disposition, and (C) the satisfaction of any obligation secured by a Lien on the
asset that is the subject of such disposition (so long as such Lien is a
Permitted Lien)) received by such Person in connection with such disposition.
Nothing contained in this Section 2.4(c)(a) shall be deemed to permit any
Borrower or Subsidiary of any Borrower to make a disposition of any assets other
than in accordance with the terms of Section 7.4. Any payments required to be
made under this Section 2.4(c)(a) shall be applied as follows:
(A) if no Event of Default has occurred and is
continuing or would result therefrom and Borrowers have Excess
Availability of at least (x) $3,000,000 during the In Season
Period, (y) $6,500,000 during the Initial Seasonal Overadvance
Period, or (z) $5,000,000 during the Remaining Seasonal
Overadvance Period, as applicable, after giving effect to each
such prepayment, then first to the Term Loan and any accrued
and unpaid interest on account thereof, or if all such amounts
have been paid in full in cash, to the Advances as set forth
in Section 2.4(b)(a); and
(B) if no Event of Default has occurred and is
continuing or would result therefrom and Borrowers have Excess
Availability of less than (x) $3,000,000 during the In Season
Period, (y) $6,500,000 during the Initial Seasonal Overadvance
Period, or (z) $5,000,000 during the Remaining Seasonal
Overadvance Period, as applicable, after giving effect to each
such prepayment, then first to the Advances and accrued and
unpaid interest on account thereof (including the
contemporaneous establishment of a permanent reserve against
Availability in the amount of the net cash proceeds received
by such Person in connection with such disposition applied to
reduce the then outstanding Advances and accrued and unpaid
interest on account thereof), or if all such amounts have been
paid in full in cash, to the Term Loan as set forth in Section
2.4(b)(i);
(b) Upon the issuance or incurrence by any Borrower or any
Subsidiary of any Borrower of any Indebtedness or the sale or issuance by any
Borrower or any Subsidiary of any Borrower of any shares of its Stock, Borrowers
shall prepay the outstanding principal amount of the Term Loan (or, if the Term
Loan has been paid in full, the Advances) in an amount equal to 100% of the net
cash proceeds (which calculation of net cash proceeds shall include provision
for (A) the actual and reasonable costs and expenses incurred in connection with
such issuance or incurrence, (B) any anticipated income tax liability resulting
from such issuance or incurrence, and (C) the satisfaction of any obligation
secured by a Lien on the Stock that is the subject of such issuance (so long as
such Lien is a Permitted Lien)) received by such Person in connection therewith.
Nothing contained in this Section 2.4(c)(b) shall be deemed to permit any such
issuance, incurrence or sale otherwise prohibited by the terms and conditions of
this Agreement. Any payments required to be made under this Section 2.4(c)(b)
shall be applied as follows:
(A) if no Event of Default has occurred and is
continuing or would result therefrom and Borrowers have Excess
Availability of at least
43
(x) $3,000,000 during the In Season Period, (y) $6,500,000
during the Initial Seasonal Overadvance Period, or (z)
$5,000,000 during the Remaining Seasonal Overadvance Period,
as applicable, after giving effect to each such prepayment,
then first to the Term Loan and any accrued and unpaid
interest on account thereof, or if all such amounts have been
paid in full in cash, to the Advances as set forth in Section
2.4(b)(a); and
(B) if no Event of Default has occurred and is
continuing or would result therefrom and Borrowers have Excess
Availability of less than (x) $3,000,000 during the In Season
Period, (y) $6,500,000 during the Initial Seasonal Overadvance
Period, or (z) $5,000,000 during the Remaining Seasonal
Overadvance Period, as applicable, after giving effect to each
such prepayment, then first to the Advances and accrued and
unpaid interest on account thereof (including the
contemporaneous establishment of a permanent reserve against
Availability in the amount of the net cash proceeds received
by such Person in connection with such issuance or sale of
Stock applied to reduce the then outstanding Advances and
accrued and unpaid interest on account thereof), or if all
such amounts have been paid in full in cash, to the Term Loan
as set forth in Section 2.4(b)(i);
(c) Upon the receipt by any Borrower or any Subsidiary of any
Borrower of any Non-Borrowing Base Extraordinary Receipts, Borrowers shall
prepay the outstanding principal amount of the Term Loan (or, if the Term Loan
has been paid in full, the Advances) in an amount equal to 100% of such
Extraordinary Receipts (which calculation shall include provision for (A) the
actual and reasonable costs and expenses incurred in connection with such
Extraordinary Receipts, (B) any anticipated income tax liability resulting from
such Extraordinary Receipts, and (C) the satisfaction of any obligation secured
by a Lien on such Extraordinary Receipts (so long as such Lien is a Permitted
Lien)). Any payments required to be made under this Section 2.4(c)(c) shall be
applied as follows:
(A) if no Event of Default has occurred and is
continuing or would result therefrom and Borrowers have Excess
Availability of at least (x) $3,000,000 during the In Season
Period, (y) $6,500,000 during the Initial Seasonal Overadvance
Period, or (z) $5,000,000 during the Remaining Seasonal
Overadvance Period, as applicable, after giving effect to each
such prepayment, then first to the Term Loan and any accrued
and unpaid interest on account thereof, or if all such amounts
have been paid in full in cash, to the Advances as set forth
in Section 2.4(b)(a); and
(B) if no Event of Default has occurred and is
continuing or would result therefrom and Borrowers have Excess
Availability of less than (x) $3,000,000 during the In Season
Period, (y) $6,500,000 during the Initial Seasonal Overadvance
Period, or (z) $5,000,000 during the Remaining Seasonal
Overadvance Period, as applicable, after giving effect to each
such prepayment, then first to the Advances and accrued and
unpaid interest on account thereof (including the
contemporaneous
44
establishment of a permanent reserve against Availability in
the amount of the Non-Borrowing Base Extraordinary Receipts
applied to reduce the then outstanding Advances and accrued
and unpaid interest on account thereof), or if all such
amounts have been paid in full in cash, to the Term Loan as
set forth in Section 2.4(b)(i); and
(d) Upon the receipt by any Borrower or any Subsidiary of any
Borrower of any Borrowing Base Extraordinary Receipts, Borrowers shall prepay
the outstanding principal amount of the Advances and accrued and unpaid interest
on account thereof (or if all such amounts have been paid in full in cash, to
the Term Loan as set forth in Section 2.4(b)(i)) in an amount equal to 100% of
such Borrowing Base Extraordinary Receipts.
2.5 Overadvances. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrowers to the
Lender Group pursuant to Section 2.1 and Section 2.12 is greater than either the
Dollar or percentage limitations set forth in Section 2.1 or Section 2.12, (an
"Overadvance"), Borrowers immediately shall pay to Agent, in cash, the amount of
such excess, which amount shall be used by Agent to reduce the Obligations in
accordance with the priorities set forth in Section 2.4(b), provided that this
Section 2.5 shall not apply to the Seasonal Overadvance Amount or any
Overadvance made pursuant to Section 2.3(i) hereof if paid when due. In
addition, Borrowers hereby promise to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full to the Lender Group as
and when due and payable under the terms of this Agreement and the other Loan
Documents.
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
(a) Interest Rates. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows:
(a) if the relevant Obligation is a portion of an Advance that is a
Base Rate Loan (or interest thereon or fees charged in connection therewith), at
a per annum rate equal to the Base Rate plus the Base Rate Margin;
(b) if the relevant Obligation is a portion of an Advance that is a
LIBOR Rate Loan (or interest thereon or fees charged in connection therewith),
at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin,
(c) if the relevant Obligation is the Term Loan (inclusive of any
Term Loan PIK Amount theretofore so added) or interest thereon or fees charged
in connection therewith), at a per annum rate equal to the Base Rate plus the
Base Rate Term Loan Margin; provided, however, that so long as no Event of
Default has occurred and is continuing, that portion of such interest equal to
2.0 percentage points per annum shall, in the absence of an election by the
Administrative Borrower to pay such interest in cash, be paid-in-kind by being
added to the principal balance of the Term Loan (inclusive of any Term Loan PIK
Amount theretofore so added); provided further, however, prior to the maturity
of the Term Loan, Borrowers may elect to pay all accrued and unpaid interest
under this Section 2.6(a)(iii) in cash so long as (A) Agent
45
shall have received at least 5 Business Day's prior written notice of such
election, (B) no Event of Default shall have occurred and be continuing at the
time such election is to become effective, and (C) both before and after making
such interest payment Borrowers have Excess Availability of no less than (x)
$3,000,000 during the In Season Period, (y) $6,500,000 during the Initial
Seasonal Overadvance Period, or (z) $5,000,000 during the Remaining Seasonal
Overadvance Period, as applicable; and
The foregoing notwithstanding, at no time shall any portion of the Advances bear
interest on the Daily Balance thereof at a per annum rate less than 5.25%, at no
time prior to the first anniversary of the Closing Date shall any portion of the
Term Loan (inclusive of any Term Loan PIK Amount theretofore so added) bear
interest on the Daily Balance thereof at a per annum rate less than 11.75% plus
the Triggering Percentage, at no time on and after the first anniversary of the
Closing Date and prior to the second anniversary of the Closing Date shall any
portion of the Term Loan (inclusive of the Term Loan PIK amount theretofore so
added) bear interest on the Daily Balance thereof at a per annum rate less than
13.75% plus the Triggering Percentage, and at no time on and after the second
anniversary of the Closing Date shall any portion of the Term Loan (inclusive of
the Term Loan PIK Amount theretofore so added) bear interest on the Daily
Balance thereof at a per annum rate less than 15.75% plus the Triggering
Percentage. To the extent that interest accrued hereunder at the rate set forth
herein would be less than the foregoing minimum daily rate, the interest rate
chargeable hereunder for such day automatically shall be deemed increased to the
minimum rate.
(b) Letter of Credit Fee. Borrowers shall pay Agent (for the ratable
benefit of the Lenders with a Revolver Commitment, subject to any letter
agreement between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in Section
2.12(e)) which shall accrue at a rate equal to 2.75% per annum times the Daily
Balance of the undrawn amount of all outstanding Letters of Credit.
(c) Default Rate. Upon the occurrence and during the continuation of
an Event of Default (and at the election of Agent or the Required Lenders),
(a) all Obligations (except for undrawn Letters of Credit and except
for Bank Product Obligations) that have been charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily Balance thereof at
a per annum rate equal to 3 percentage points above the per annum rate otherwise
applicable hereunder, and
(b) the Letter of Credit fee provided for above shall be increased
to 3 percentage points above the per annum rate otherwise applicable hereunder.
(d) Payment. Except as provided to the contrary in Section 2.13(a),
Interest, Letter of Credit fees, and all other fees payable hereunder shall be
due and payable, in arrears, on the first day of each month at any time that
Obligations or Commitments are outstanding. Borrowers hereby authorize Agent,
from time to time, without prior notice to Borrowers, to charge such interest
and fees, all Lender Group Expenses (as and when incurred), the charges,
commissions, fees, and costs provided for in Section 2.12(e) (as and when
accrued or incurred), the fees and costs provided for in Section 2.11 (as and
when accrued or incurred), and all other payments as and when due and payable
under any Loan Document (including any amounts due
46
and payable to Xxxxx Fargo or its Affiliates in respect of Bank Products up to
the amount of the then extant Bank Product Reserve) to Borrowers' Loan Account,
which amounts shall thereafter constitute Advances hereunder and shall accrue
interest at the rates set forth in Section 2.6(a) or, if applicable, Section
2.6(c); provided, however, that if, at the time that any amounts due in respect
of interest on the Term Loan are charged to Borrowers' Loan Account, no Event of
Default or Overadvance exists, or would result therefrom, such amounts shall not
constitute Advances but instead shall continue to remain outstanding as amounts
due in respect of the Term Loan and such amounts shall be compounded and added
to the outstanding principal balance of the Term Loan. Any interest not paid
when due shall be compounded by being charged to Borrowers' Loan Account and
shall thereafter constitute Advances hereunder and shall accrue interest at the
rate then applicable to Advances that are Base Rate Loans hereunder.
(e) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. The Lender Group
and all other parties to the Loan Documents intend to contract in strict
compliance with applicable usury law from time to time in effect. In furtherance
thereof such Persons stipulate and agree that none of the terms and provisions
contained in the Loan Documents shall ever be construed to create a contract to
pay, for the use, forbearance or detention of money, or interest in excess of
the Maximum Interest. Neither Borrowers nor Guarantor, endorsers, or other
Persons hereafter becoming liable for payment of any Obligation shall ever be
liable for unearned interest thereon or shall ever be required to pay interest
thereon in excess of the Maximum Interest, and the provisions of this section
shall control over all other provisions of the Loan Documents which may be in
conflict or apparent conflict herewith. The Lender Group expressly disavows any
intention to charge or collect excessive unearned interest or finance charges in
the event the maturity of any Obligation is accelerated. If (a) the maturity of
any Obligation is accelerated for any reason, (b) any Obligation is prepaid and
as a result any amounts held to constitute interest are determined to be in
excess of the Maximum Interest, or (c) any Lender or any other holder of any or
all of the Obligations shall otherwise collect moneys which are determined to
constitute interest which would otherwise increase the interest and other
amounts deemed interest on any or all of the Obligations to an amount in excess
of the Maximum Interest, then all sums determined to constitute interest in
excess of the Maximum Interest shall, without penalty, be promptly applied to
reduce the then outstanding principal of the related Obligations or, at such
Lender's or holder's option, promptly returned to Administrative Borrower upon
such determination. In determining whether or not the interest paid or payable,
under any specific circumstance, exceeds the Maximum Interest, the Lender Group
and Borrowers shall to the greatest extent permitted under applicable law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (ii) exclude the voluntary prepayments and the effects thereof, and
(iii) amortize, prorate, allocate, and spread the total amount of interest
throughout the entire contemplated term of the instruments evidencing
Obligations in accordance with the amounts outstanding from time to time
thereunder and the Maximum Interest in order to lawfully charge the Maximum
Interest. In the event applicable law provides for an interest ceiling under
Chapter 303 of the Texas Finance Code (the
47
"Texas Finance Code") as amended, for that day, the ceiling shall be the "weekly
ceiling" as defined in the Texas Finance Code; provided that if any applicable
law permits greater interest, the law permitting the greatest interest shall
apply. To the extent that the interest rate or rates otherwise payable under
this Agreement plus any other amounts paid under this Agreement are limited
under applicable law, each Lender agrees to limit the interest to which it is
otherwise entitled to the Maximum Interest. Such limitation for each Lender for
any period shall be in an amount equal to such Lender's Pro Rata Share
multiplied by the difference between the Applicable Facility Interest and the
Maximum Interest. For purposes of this calculation at any date of determination,
any fees or charges included in the calculation of interest not directly related
to each of the Advances, Letters of Credit, and the Term Loan shall be allocated
ratably to each based upon the outstanding Obligations of each compared to all
Obligations.
2.7 Cash Management.
(a) Borrowers shall and shall cause each of its Subsidiaries to (i)
establish and maintain cash management services of a type and on terms
satisfactory to Agent at one or more of the banks set forth on Schedule 2.7(a)
(each, a "Cash Management Bank"), and shall request in writing and otherwise
take such reasonable steps to ensure that all of its and its Subsidiaries'
Account Debtors forward payment of the amounts owed by them directly to such
Cash Management Bank, and (ii) deposit or cause to be deposited promptly, and in
any event no later than the first Business Day after the date of receipt
thereof, all Collections (including those sent directly by Account Debtors to a
Cash Management Bank) into a bank account in Agent's name (a "Cash Management
Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Agent and Borrowers, in form and substance acceptable
to Agent. Each such Cash Management Agreement shall provide, among other things,
that (i) all items of payment deposited in such Cash Management Account and
proceeds thereof are held by such Cash Management Bank agent or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) it immediately will forward by daily
sweep all amounts in the applicable Cash Management Account to the Agent's
Account.
(c) So long as no Default or Event of Default has occurred and is
continuing, Administrative Borrower may amend Schedule 2.7(a) to add or replace
a Cash Management Bank or Cash Management Account; provided, however, that (i)
such prospective Cash Management Bank shall be satisfactory to Agent and Agent
shall have consented in writing in advance to the opening of such Cash
Management Account with the prospective Cash Management Bank, and (ii) prior to
the time of the opening of such Cash Management Account, Borrowers and such
prospective Cash Management Bank shall have executed and delivered to Agent a
Cash Management Agreement. Borrowers shall close any of their Cash Management
Accounts (and establish replacement cash management accounts in accordance with
the foregoing sentence) promptly and in any event within 30 days of notice from
Agent that the creditworthiness of any Cash Management Bank is no longer
acceptable in Agent's reasonable judgment, or as promptly as practicable and in
any event within 60 days of notice from Agent
48
that the operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank with respect to Cash Management Accounts
or Agent's liability under any Cash Management Agreement with such Cash
Management Bank is no longer acceptable in Agent's reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral accounts,
with all cash, checks and similar items of payment in such accounts securing
payment of the Obligations, and in which Borrowers are hereby deemed to have
granted a Lien to Agent.
2.8 Crediting Payments; Float Charge. The receipt of any payment item by
Agent (whether from transfers to Agent by the Cash Management Banks pursuant to
the Cash Management Agreements or otherwise) shall not be considered a payment
on account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 11:00 a.m. (California time). If any payment item is received into the
Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day. From and after
the Closing Date, Agent shall be entitled to charge Borrowers for 1 Business Day
of `clearance' or `float' at the rate applicable to Base Rate Loans under
Section 2.6 on all Collections that are received by Borrowers (regardless of
whether forwarded by the Cash Management Banks to Agent). This across-the-board
1 Business Day clearance or float charge on all Collections is acknowledged by
the parties to constitute an integral aspect of the pricing of the financing of
Borrowers and shall apply irrespective of whether or not there are any
outstanding monetary Obligations; the effect of such clearance or float charge
being the equivalent of charging 1 Business Day of interest on such Collections.
The parties acknowledge and agree that the economic benefit of the foregoing
provisions of this Section 2.8 shall be for the exclusive benefit of Agent.
2.9 Designated Account. Agent is authorized to make the Advances and the
Term Loan, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
pursuant to Section 2.6(d). Administrative Borrower agrees to establish and
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances requested by Borrowers and made by
Agent or the Lenders hereunder. Unless otherwise agreed by Agent and
Administrative Borrower, any Advance, Agent Advance, or Swing Loan requested by
Borrowers and made by Agent or the Lenders hereunder shall be made to the
Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrowers (the "Loan Account")
on which Borrowers will be charged with the Term Loan, all Advances (including
Agent Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrowers or for Borrowers' account, the Letters of Credit issued by Issuing
Lender for Borrowers' account, and with all
49
other payment Obligations hereunder or under the other Loan Documents (except
for Bank Product Obligations), including, accrued interest, fees and expenses,
and Lender Group Expenses. In accordance with Section 2.8, the Loan Account will
be credited with all payments received by Agent from Borrowers or for Borrowers'
account, including all amounts received in the Agent's Account from any Cash
Management Bank. Agent shall render statements regarding the Loan Account to
Administrative Borrower, including principal, interest, fees, and including an
itemization of all charges and expenses constituting Lender Group Expenses
owing, and such statements shall be conclusively presumed to be correct and
accurate and constitute an account stated between Borrowers and the Lender Group
unless, within 30 days after receipt thereof by Administrative Borrower,
Administrative Borrower shall deliver to Agent written objection thereto
describing the error or errors contained in any such statements.
2.11 Fees. Borrowers shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) Commitment Fee. On the first day of each month during the term
of this Agreement, a commitment fee in an amount equal to 0.375% per annum times
the result of (a) the Maximum Revolver Amount, less (b) the sum of (i) the
average Daily Balance of Advances that were outstanding during the immediately
preceding month, plus (ii) the average Daily Balance of the Letter of Credit
Usage during the immediately preceding month,
(b) Fee Letter Fees. As and when due and payable under the terms of
the Fee Letter, Borrowers shall pay to Agent the fees set forth in the Fee
Letter, and
(c) Audit, Appraisal, and Valuation Charges. For the separate
account of Agent, audit, appraisal, and valuation fees and charges as follows
(i) a fee of $850 per day, per auditor, plus out-of-pocket expenses for each
financial audit of a Borrower performed by personnel employed by Agent;
provided, however, that so long as no Event of Default has occurred and is
continuing Borrowers shall not be obligated to reimburse the Agent for more than
4 audits in any 12 consecutive month period, (ii) if implemented a one time
charge of $5,000 plus out-of-pocket expenses for expenses for the establishment
of electronic collateral reporting systems, (iii) subject to Section 2.1(b) a
fee of $1,500 per day per appraiser, plus out-of-pocket expenses, for each
appraisal of the Collateral performed by personnel employed by Agent, and (iv)
the actual charges paid or incurred by Agent if it elects to employ the services
of one or more third Persons to perform financial audits of Borrowers, to
appraise the Collateral, or any portion thereof, or to assess a Borrower's
business valuation.
2.12 Letters of Credit.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Xxxxx Fargo) for the account of
Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment,
50
renewal, or extension of an outstanding L/C or L/C Undertaking), Administrative
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Lender) to the Issuing Lender and Agent (reasonably in advance of the requested
date of issuance, amendment, renewal, or extension) a notice requesting the
issuance of an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking
to be amended, renewed, or extended, the date of issuance, amendment, renewal,
or extension, the date on which such L/C or L/C Undertaking is to expire, the
amount of such L/C or L/C Undertaking, the name and address of the beneficiary
thereof (or the beneficiary of the Underlying Letter of Credit, as applicable),
and such other information as shall be necessary to prepare, amend, renew, or
extend such L/C or L/C Undertaking. If requested by the Issuing Lender,
Borrowers also shall be an applicant under the application with respect to any
Underlying Letter of Credit that is to be the subject of an L/C Undertaking. The
Issuing Lender shall have no obligation to issue a Letter of Credit if any of
the following would result after giving effect to the requested Letter of
Credit:
(a) the Letter of Credit Usage would exceed the Borrowing Base less
the amount of outstanding Advances, or
(b) the Letter of Credit Usage would exceed $2,500,000, or
(c) the Letter of Credit Usage would exceed the Maximum Revolver
Amount less the then extant amount of outstanding Advances.
Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Administrative Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans
under Section 2.6. To the extent an L/C Disbursement is deemed to be an Advance
hereunder, Borrowers' obligation to reimburse such L/C Disbursement shall be
discharged and replaced by the resulting Advance. Promptly following receipt by
Agent of any payment from Borrowers pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to Section 2.12(c) to reimburse the Issuing Lender,
then to such Lenders and the Issuing Lender as their interest may appear.
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(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrowers had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitment, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrowers on the date due as provided in clause (a) of
this Section, or of any reimbursement payment required to be refunded to
Borrowers for any reason. Each Lender with a Revolver Commitment acknowledges
and agrees that its obligation to deliver to Agent, for the account of the
Issuing Lender, an amount equal to its respective Pro Rata Share pursuant to
this Section 2.12(b) shall be absolute and unconditional and such remittance
shall be made notwithstanding the occurrence or continuation of an Event of
Default or Default or the failure to satisfy any condition set forth in Section
3 hereof. If any such Lender fails to make available to Agent the amount of such
Lender's Pro Rata Share of any payments made by the Issuing Lender in respect of
such Letter of Credit as provided in this Section, Agent (for the account of the
Issuing Lender) shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate until paid
in full.
(c) Each Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability
that is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Each Borrower agrees to be bound
by the Underlying Issuer's regulations and interpretations of any Underlying
Letter of Credit or by Issuing Lender's interpretations of any L/C issued by
Issuing Lender to or for such Borrower's account, even though this
interpretation may be different from such Borrower's own, and each Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrowers' instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands
that the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrowers
against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused
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by the gross negligence or willful misconduct of the Issuing Lender or any other
member of the Lender Group.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred by
the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change in any applicable law, treaty,
rule, or regulation or any change in the interpretation or application thereof
by any Governmental Authority, or (ii) compliance by the Underlying Issuer or
the Lender Group with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental Authority or monetary
authority including, Regulation D of the Federal Reserve Board as from time to
time in effect (and any successor thereto):
(a) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued hereunder, or
(b) there shall be imposed on the Underlying Issuer or the Lender
Group any other condition regarding any Underlying Letter of Credit or any
Letter of Credit issued pursuant hereto,
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
2.13 LIBOR Option.
(a) Interest and Interest Payment Dates. In lieu of having interest
charged at the rate based upon the Base Rate, Borrowers shall have the option
(the "LIBOR Option") to
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have interest on all or a portion of the Advances be charged at a rate of
interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall be
payable on the earliest of (i) the last day of the Interest Period applicable
thereto, (ii) the occurrence of an Event of Default in consequence of which the
Required Lenders or Agent on behalf thereof elect to accelerate the maturity of
all or any portion of the Obligations or (iii) termination of this Agreement
pursuant to the terms hereof. On the last day of each applicable Interest
Period, unless Administrative Borrower properly has exercised the LIBOR Option
with respect thereto, the interest rate applicable to such LIBOR Rate Loan
automatically shall convert to the rate of interest then applicable to Base Rate
Loans of the same type hereunder. At any time that an Event of Default has
occurred and is continuing, Borrowers no longer shall have the option to request
that Advances bear interest at the LIBOR Rate and Agent shall have the right to
convert the interest rate on all outstanding LIBOR Rate Loans to the rate then
applicable to Base Rate Loans hereunder.
(b) LIBOR Election.
(a) Administrative Borrower may, at any time and from time to time,
so long as no Event of Default has occurred and is continuing, elect to exercise
the LIBOR Option by notifying Agent prior to 11:00 a.m. (California time) at
least 3 Business Days prior to the commencement of the proposed Interest Period
(the "LIBOR Deadline"). Notice of Administrative Borrower's election of the
LIBOR Option for a permitted portion of the Advances and an Interest Period
pursuant to this Section shall be made by delivery to Agent of a LIBOR Notice
received by Agent before the LIBOR Deadline, or by telephonic notice received by
Agent before the LIBOR Deadline (to be confirmed by delivery to Agent of a LIBOR
Notice received by Agent prior to 5:00 p.m. (California time) on the same day.
Promptly upon its receipt of each such LIBOR Notice, Agent shall provide a copy
thereof to each of the Lenders having a Revolver Commitment.
(b) Each LIBOR Notice shall be irrevocable and binding on Borrowers.
In connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend,
and hold Agent and the Lenders harmless against any loss, cost, or expense
incurred by Agent or any Lender as a result of (a) the payment of any principal
of any LIBOR Rate Loan other than on the last day of an Interest Period
applicable thereto (including as a result of an Event of Default), (b) the
conversion of any LIBOR Rate Loan other than on the last day of the Interest
Period applicable thereto, or (c) the failure to borrow, convert, continue or
prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered
pursuant hereto (such losses, costs, and expenses, collectively, "Funding
Losses"). WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH
INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN ANY WAY OR
TO ANY EXTENT IN WHOLE OR IN PART CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR
OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON OR UNDER ANY CLAIM OR
THEORY OF STRICT LIABILITY. Funding Losses shall, with respect to Agent or any
Lender, be deemed to equal the amount determined by Agent or such Lender to be
the excess, if any, of (i) the amount of interest that would have accrued on the
principal amount of such LIBOR Rate Loan had such event not occurred, at the
LIBOR Rate that would have been applicable thereto, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert, or continue, for the period that
would have been the Interest Period therefor), minus (ii) the amount
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of interest that would accrue on such principal amount for such period at the
interest rate which Agent or such Lender would be offered were it to be offered,
at the commencement of such period, Dollar deposits of a comparable amount and
period in the London interbank market. A certificate of Agent or a Lender
delivered to Administrative Borrower setting forth any amount or amounts that
Agent or such Lender is entitled to receive pursuant to this Section shall be
conclusive absent manifest error.
(c) Borrowers shall have not more than 5 LIBOR Rate Loans in effect
at any given time. Borrowers only may exercise the LIBOR Option for LIBOR Rate
Loans of at least $1,000,000 and integral multiples of $500,000 in excess
thereof.
(c) Prepayments. Borrowers may prepay LIBOR Rate Loans at any time;
provided, however, that in the event that LIBOR Rate Loans are prepaid on any
date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Collections in accordance with Section
2.4(b) or for any other reason, including early termination of the term of this
Agreement or acceleration of all or a portion of the Obligations pursuant to the
terms hereof, each Borrower shall indemnify, defend, and hold Agent and the
Lenders and their Participants harmless against any and all Funding Losses in
accordance with clause (b)(b) above.
(d) Special Provisions Applicable to LIBOR Rate.
(a) The LIBOR Rate may be adjusted by Agent with respect to any
Lender on a prospective basis to take into account any additional or increased
costs to such Lender of maintaining or obtaining any eurodollar deposits or
increased costs due to changes in applicable law occurring subsequent to the
commencement of the then applicable Interest Period, including changes in tax
laws (except changes of general applicability in corporate income tax laws) and
changes in the reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor), excluding the Reserve Percentage,
which additional or increased costs would increase the cost of funding loans
bearing interest at the LIBOR Rate. In any such event, the affected Lender shall
give Administrative Borrower and Agent notice of such a determination and
adjustment and Agent promptly shall transmit the notice to each other Lender
and, upon its receipt of the notice from the affected Lender, Administrative
Borrower may, by notice to such affected Lender (y) require such Lender to
furnish to Administrative Borrower a statement setting forth the basis for
adjusting such LIBOR Rate and the method for determining the amount of such
adjustment, or (z) repay the LIBOR Rate Loans with respect to which such
adjustment is made (together with any amounts due under clause (b)(b) above).
(b) In the event that any change in market conditions or any law,
regulation, treaty, or directive, or any change therein or in the interpretation
of application thereof, shall at any time after the date hereof, in the
reasonable opinion of any Lender, make it unlawful or impractical for such
Lender to fund or maintain LIBOR Advances or to continue such funding or
maintaining, or to determine or charge interest rates at the LIBOR Rate, such
Lender shall give notice of such changed circumstances to Agent and
Administrative Borrower and Agent promptly shall transmit the notice to each
other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender's notice shall be deemed to be
the last day of the Interest Period of such LIBOR Rate Loans, and interest upon
the
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LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate
then applicable to Base Rate Loans, and (z) Borrowers shall not be entitled to
elect the LIBOR Option until such Lender determines that it would no longer be
unlawful or impractical to do so.
(e) No Requirement of Matched Funding. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their Participants, is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.
2.14 Capital Requirements. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request, or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice (the "Cost Notice"), Borrowers agree to pay such Lender on demand
the amount of such reduction of return of capital as and when such reduction is
determined, payable within 60 days after presentation by such Lender of a
statement in the amount and setting forth in reasonable detail such Lender's
calculation thereof and the assumptions upon which such calculation was based
(which statement shall be deemed true and correct absent manifest error). In
determining such amount, such Lender may use any reasonable averaging and
attribution methods. Notwithstanding the foregoing, if Administrative Borrower
receives a Cost Notice after the first anniversary of the Closing Date which
relates to events that are not equally applicable to substantially all banks
located in the continental United States of America, and if Administrative
Borrower provides written notice (a "Replacement Notice") to Agent and such
Lender within thirty (30) days after receiving such Cost Notice, Borrowers may
thereafter substitute for such Lender, within sixty (60) days of the date of
such Replacement Notice, any Eligible Transferee.
2.15 Joint and Several Liability of Borrowers.
(a) Each of Borrowers is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Agent and the Lenders under this Agreement,
for the mutual benefit, directly and indirectly, of each of Borrowers and in
consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations.
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(b) Each of Borrowers, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this Section 2.14), it being the intention of the
parties hereto that all the Obligations shall be the joint and several
obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers shall fail to make
any payment with respect to any of the Obligations as and when due or to perform
any of the Obligations in accordance with the terms thereof, then in each such
event the other Persons composing Borrowers will make such payment with respect
to, or perform, such Obligation.
(d) The Obligations of each Person composing Borrowers under the
provisions of this Section 2.14 constitute the absolute and unconditional, full
recourse Obligations of each Person composing Borrowers enforceable against each
such Borrower to the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each
Person composing Borrowers hereby waives notice of acceptance of its joint and
several liability, notice of any Advances or Letters of Credit issued under or
pursuant to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Agent or Lenders under or in respect of
any of the Obligations, any requirement of diligence or to mitigate damages and,
generally, to the extent permitted by applicable law, all demands, notices and
other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Person composing Borrowers hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment of any of the Obligations, the acceptance of any payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Agent or Lenders at any time or times
in respect of any default by any Person composing Borrowers in the performance
or satisfaction of any term, covenant, condition or provision of this Agreement,
any and all other indulgences whatsoever by Agent or Lenders in respect of any
of the Obligations, and the taking, addition, substitution or release, in whole
or in part, at any time or times, of any security for any of the Obligations or
the addition, substitution or release, in whole or in part, of any Person
composing Borrowers. Without limiting the generality of the foregoing, each of
Borrowers assents to any other action or delay in acting or failure to act on
the part of any Agent or Lender with respect to the failure by any Person
composing Borrowers to comply with any of its respective Obligations, including,
without limitation, any failure strictly or diligently to assert any right or to
pursue any remedy or to comply fully with applicable laws or regulations
thereunder, which might, but for the provisions of this Section 2.14 afford
grounds for terminating, discharging or relieving any Person composing
Borrowers, in whole or in part, from any of its Obligations under this Section
2.14, it being the intention of each Person composing Borrowers that, so long as
any of the Obligations hereunder remain unsatisfied, the Obligations of such
Person composing Borrowers under this Section 2.14 shall not be discharged
except by performance and then only to the extent of such performance. The
Obligations of each Person composing Borrowers under this Section 2.14 shall not
be diminished or rendered unenforceable by any winding up, reorganization,
57
arrangement, liquidation, reconstruction or similar proceeding with respect to
any Person composing Borrowers or any Agent or Lender. The joint and several
liability of the Persons composing Borrowers hereunder shall continue in full
force and effect notwithstanding any absorption, merger, amalgamation or any
other change whatsoever in the name, constitution or place of formation of any
of the Persons composing Borrowers or any Agent or Lender.
(f) Each Person composing Borrowers represents and warrants to Agent
and Lenders that such Borrower is currently informed of the financial condition
of Borrowers and of all other circumstances that a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations. Each Person
composing Borrowers further represents and warrants to Agent and Lenders that
such Borrower has read and understands the terms and conditions of the Loan
Documents. Each Person composing Borrowers hereby covenants that such Borrower
will continue to keep informed of Borrowers' financial condition, the financial
condition of other guarantors, if any, and of all other circumstances that bear
upon the risk of nonpayment or nonperformance of the Obligations.
(g) The provisions of this Section 2.14 are made for the benefit of
the Agent, the Lenders and their respective successors and assigns, and may be
enforced by it or them from time to time against any or all of the Persons
composing Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their rights
against any of the other Persons composing Borrowers or to exhaust any remedies
available to it or them against any of the other Persons composing Borrowers or
to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
Section 2.14 shall remain in effect until all of the Obligations shall have been
paid in full or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by any Agent or Lender upon the insolvency,
bankruptcy or reorganization of any of the Persons composing Borrowers, or
otherwise, the provisions of this Section 2.14 will forthwith be reinstated in
effect, as though such payment had not been made.
(h) Each of the Persons composing Borrowers hereby agrees that it
will not enforce any of its rights of contribution or subrogation against the
other Persons composing Borrowers with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to
the Agent or the Lenders with respect to any of the Obligations or any
collateral security therefor until such time as all of the Obligations have been
paid in full in cash. Any claim which any Borrower may have against any other
Borrower with respect to any payments to any Agent or Lender hereunder or under
any other Loan Documents are hereby expressly made subordinate and junior in
right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full in cash
before any payment or distribution of any character, whether in cash, securities
or other property, shall be made to any other Borrower therefor.
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(i) Each of the Persons composing Borrowers hereby agrees that,
after the occurrence and during the continuance of any Default or Event of
Default, the payment of any amounts due with respect to the indebtedness owing
by any Borrower to any other Borrower is hereby subordinated to the prior
payment in full in cash of the Obligations. Each Borrower hereby agrees that
after the occurrence and during the continuance of any Default or Event of
Default, such Borrower will not demand, xxx for or otherwise attempt to collect
any indebtedness of any other Borrower owing to such Borrower until the
Obligations shall have been paid in full in cash. If, notwithstanding the
foregoing sentence, such Borrower shall collect, enforce or receive any amounts
in respect of such indebtedness, such amounts shall be collected, enforced and
received by such Borrower as trustee for the Agent, and the Agent shall deliver
any such amounts to the Administrative Agent for application to the Obligations
in accordance with Section 2.4(b).
2.16 Registered Notes. Administrative Borrower agrees to record the Term
Loan on the Register referred to in Section 14.1. The Term Loan recorded on the
Register (a "Registered Loan") may not be evidenced by promissory notes other
than Registered Notes (as defined below). Upon the registration of the Term
Loan, Administrative Borrower agrees, at the request of any Lender, to execute
and deliver to such Lender a promissory note, in conformity with the terms of
this Agreement, in registered form to evidence such Registered Loan, in form and
substance reasonably satisfactory to such Lender, and registered as provided in
Section 14.1 (a "Registered Note"), payable to the order of such Lender and
otherwise duly completed. Once recorded on the Register, the Term Loan evidenced
by such Registered Note may not be removed from the Register so long as it
remains outstanding, and a Registered Note may not be exchanged for a promissory
note that is not a Registered Note.
2.17 Securitization. Each Borrower hereby acknowledges that the Lenders
and each of their Affiliates may sell or securitize the Borrowings (a
"Securitization") through the pledge of the Borrowings as collateral security
for loans to such Lenders or their Affiliates or through the sale of the
Borrowings or the issuance of direct or indirect interests in the Borrowings,
which loans to such Lenders or their Affiliate or direct or indirect interests
will be rated by Xxxxx'x, Standard & Poor's or one or more other rating agencies
(the "Rating Agencies"). Each Borrower shall cooperate with such Lenders and
their Affiliates to effect the Securitization including, without limitation, by
(a) amending this Agreement and the other Loan Documents, and executing such
additional documents, as reasonably requested by such Lenders in connection with
the Securitization, provided that (i) any such amendment or additional
documentation does not impose costs on Borrowers and the Lender that elects to
securitize its Borrowings shall pay for costs and expenses associated therewith,
and (ii) any such amendment or additional documentation does not materially
adversely affect the rights, or materially increase the obligations, of
Borrowers under the Loan Documents or change or affect in a manner adverse to
Borrowers the financial terms of the Borrowings, (b) providing such information
as may be reasonably requested by such Lenders in connection with the rating of
the Borrowings or the Securitization, and (c) providing in connection with any
rating of the Borrowings a certificate (i) agreeing to indemnify such Lenders
and any of their Affiliates, any of the Rating Agencies, or any party providing
credit support or otherwise participating in the Securitization (collectively,
the "Securitization Parties") for any losses, claims, damages or liabilities
(the "Liabilities") to which such Lenders, their Affiliates or such
Securitization Parties may become subject insofar as the Liabilities arise out
of or are based upon any untrue statement or alleged untrue statement of
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any material fact contained in any Loan Document or in any writing delivered by
or on behalf of Borrowers or its Affiliates to the Lender Group in connection
with any Loan Document or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary in order to make the statements therein, in light of the circumstances
under which they were made not misleading, and such indemnity shall survive any
transfer by any Lender or its successors or assigns of the Borrowings, and (ii)
agreeing to reimburse such Lenders and any of their Affiliates for any legal or
other expenses reasonably incurred by such Persons in connection with defending
the Liabilities.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Extension of Credit. The
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to make any initial extension of credit provided for
hereunder), is subject to the fulfillment, to the satisfaction of Agent, of each
of the conditions precedent set forth below:
(a) the Closing Date shall occur on or before October 30, 2002;
(b) Agent shall have received all financing statements and PPSA
Filings required by Agent, duly authorized by the applicable Borrower or
Guarantors;
(c) Agent shall have received each of the following documents, in
form and substance satisfactory to Agent, duly executed, and each such document
shall be in full force and effect:
(a) the Control Agreements,
(b) the Copyright Security Agreement,
(c) the Disbursement Letter,
(d) the Due Diligence Letter,
(e) the Fee Letter,
(f) the Guaranty,
(g) the Cash Management Agreements,
(h) the Intercompany Subordination Agreement,
(i) the Interlender Agreement,
(j) the Officers' Certificate,
(k) the Patent Security Agreement,
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(l) the Stock Pledge Agreements, together with all certificates
representing the shares of Stock pledged thereunder, as well as Stock powers
with respect thereto endorsed in blank,
(m) the Trademark Security Agreement, and
(n) the Pay-Off Letter, together with UCC termination statements and
other documentation evidencing the termination by Existing Lenders of their
Liens in and to the properties and assets of Borrowers and Guarantor;
(d) Agent shall have received a certificate from the Secretary of
each Borrower attesting to the resolutions of such Borrower's board of directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which such Borrower is a party and authorizing specific
officers of such Borrower to execute the same;
(e) Agent shall have received copies of each Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status with respect
to each Borrower, dated within 30 days of the Closing Date, such certificate to
be issued by the appropriate officer of the jurisdiction of organization of such
Borrower, which certificate shall indicate that such Borrower is in good
standing or has registered its existence in such jurisdiction;
(g) Agent shall have received certificates of status with respect to
each Borrower, each dated within 30 days of the Closing Date, such certificates
to be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Borrower) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing or has
registered its existence in such jurisdiction;
(h) Agent shall have received a certificate from the Secretary of
Guarantor attesting to the resolutions of Guarantor's board of directors
authorizing its execution, delivery, and performance of the Loan Documents to
which Guarantor is a party and authorizing specific officers of Guarantor to
execute the same;
(i) Agent shall have received copies of Guarantor's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Guarantor;
(j) Agent shall have received a certificate of status with respect
to Guarantor, dated within 30 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of
Guarantor, which certificate shall indicate that Guarantor is in good standing
or has registered its existence in such jurisdiction;
(k) Agent shall have received certificates of status with respect to
Guarantor, dated within 30 days of the Closing Date, such certificates to be
issued by the appropriate officer
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of the jurisdictions (other than the jurisdiction of organization of Guarantor)
in which its failure to be duly qualified or licensed would constitute a
Material Adverse Change, which certificates shall indicate that Guarantor is in
good standing or has registered its existence in such jurisdictions;
(l) Agent shall have received a certificate of insurance, together
with the endorsements thereto, as are required by Section 6.8, the form and
substance of which shall be satisfactory to Agent;
(m) Agent shall have received Collateral Access Agreements with
respect to the following locations: (i) 0000 Xxxxxxxx Xxxxxx, Xxxx, Xxxxx, (ii)
0000 000xx Xxxxxx, Xxxxxxx, Xxxxxxxx, (iii) 0000 00xx Xxxxxx, Xxxxx, Xxxxxxxx,
(iv) 000 Xxxxx Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxx; (v) 0000 Xxxxxx Xxxxx,
Xxxxxxxxxxx, Xxxxxxx, Xxxxxx; (vi) 000 X.X. 0xx Xxxxxx, XxXxxxxx, Xxxxx; (vii)
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx; and (viii) 0000
Xxxx Xxxxxx, Xxxxx, Xxxxxxxx;
(n) Agent shall have received opinions of Borrowers' and Guarantor's
counsel in form and substance satisfactory to Agent and the Lenders;
(o) Agent shall have received satisfactory evidence (including a
certificate of the chief financial officer of Borrowers) that all tax returns
required to be filed by Borrowers or Guarantor have been timely filed and all
taxes upon Borrowers, Guarantor, or their respective properties, assets, income,
and franchises (including Real Property taxes and payroll taxes) have been paid
prior to delinquency, except such taxes that are the subject of a Permitted
Protest;
(p) Borrowers shall have the Required Availability after giving
effect to the initial extensions of credit hereunder;
(q) Agent shall have completed its business, legal, and collateral
due diligence, including (i) a collateral audit and review of Borrowers' and
Guarantor's books and records and verification of Borrowers' and Guarantor's
representations and warranties to the Lender Group, the results of which shall
be satisfactory to Agent, (ii) in connection with a takeover audit and review of
the Inventory, a cost testing audit and review of Eligible Inventory, the result
of which shall be satisfactory to Agent, (iii) a legal review of the Weed Wizard
Litigation, the result of which shall be satisfactory to Agent, and (iv) an
inspection of each of the locations where Inventory is located, the results of
which shall be satisfactory to Agent;
(r) Agent shall have received completed reference checks with
respect to Borrowers' senior management, the results of which are satisfactory
to Agent in its sole discretion;
(s) Agent shall have received an appraisal of the Net Recovery
Percentage applicable to Borrowers' Inventory, the results of which shall be
satisfactory to Agent;
(t) Agent shall have received Borrowers' Closing Date Business Plan;
which Projections shall include, to Agent's satisfaction, the Parent's and Weed
Wizard's forecasted (a) balance sheets, (b) profit and loss statements, and (c)
cash flow statements, all prepared on a
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consistent basis with Parent's and Weed Wizard's historical financial
statements, together with appropriate supporting details and a statement of
underlying assumptions;
(u) Borrowers shall pay all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;
(v) Agent shall have received copies of Subordinated Junior Debt
Documents which shall be in form and substance satisfactory to the Lender Group,
together with a certificate of the Secretary of the applicable Borrower
certifying each such document as being a true, correct, and complete copy
thereof;
(w) Borrowers shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in connection
with the execution and delivery by Borrowers of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby and
thereby;
(x) Agent and Ableco shall have received satisfactory evidence
(including a certificate of the Secretary of Easy Gardener and Parent) that the
Xxxxx Settlement Agreement has been executed and delivered substantially in the
form previously delivered to Agent and Ableco; and
(y) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent.
3.2 Conditions Subsequent to the Initial Extension of Credit. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to Agent certified
copies of the policies of insurance, together with the endorsements thereto, as
are required by Section 6.8, the form and substance of which shall be reasonably
satisfactory to Agent and its counsel;
(b) within 15 days of the Closing Date, deliver to Agent a
promissory note executed by Xxxxxx Xxxxxx to the order of Parent in the
principal amount of $546,000 together with an endorsement executed in blank by
Parent;
(c) within 15 days of the Closing Date, deliver to Agent evidence in
form and substance satisfactory to Agent, of the satisfaction and release, as of
record, of the Liens identified on Schedule 3.2(c);
(d) by no later than March 31, 2003, Borrowers shall cause (i) Weed
Wizard to be legally dissolved and its assets sold in an orderly liquidation and
its liabilities duly satisfied, each in form and substance satisfactory to
Agent, or (ii) 100% of the outstanding Stock of Weed Wizard to be sold or (iii)
Weed Wizard to commence an Insolvency Proceeding, and, in connection with the
foregoing clauses (i) and (ii), so long as no Event of Default has occurred
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and is continuing or would result therefrom, Agent will release (a) Weed Wizard
as a Guarantor and (b) Agent's liens on the assets and/or Stock of Weed Wizard,
in either case in exchange for any net proceeds of such liquidation or
dissolution, if any;
(e) within 30 days from the Closing Date, deliver to Agent a Control
Agreement, or its equivalent, in form and substance satisfactory to Agent in its
Permitted Discretion, entered into by and among the Borrowers, Agent, and the
Royal Bank of Canada or such other bank mutually satisfactory to Agent and
Borrowers with respect to any DDA maintained by a bank in Canada; provided that,
so long as no Event of Default has occurred and is continuing, (i) such Control
Agreement shall permit (subject to clauses (ii) and (iii) below) Borrowers to
maintain at all times an amount equal to at least $25,000 in such DDA, (ii) on
the last Business Day of each fiscal month, Borrowers shall immediately deposit
the positive difference between (A) the amount of cash in such DDA as of such
date and (B) $25,000, into the Cash Management Account, and (iii) at any time
the amount of cash in such DDA exceeds $100,000, Borrowers shall immediately
deposit the difference between (A) the amount of cash in such DDA as of such
date and (B) $25,000, into the Cash Management Account;
(f) within 10 days from the Closing Date, deliver to Agent searches
reflecting the filing of all financing statements and PPSA Filings;
(g) within 30 days from the Closing Date, deliver to Agent certified
searches from the Secretary of State of Delaware and Michigan and the equivalent
governmental agency in Ontario, Canada, reflecting (i) the filing of all
financing statements and PPSA Filings, and (ii) that no other Liens have been
filed as of the "through dates" of the searches performed by Agent and delivered
to Borrowers; and
(h) within 10 Business Days of the Closing Date, deliver to Agent an
opinion of Ampro's counsel, in form and substance satisfactory to Agent and the
Lenders.
3.3 Conditions Precedent to all Extensions of Credit. The obligation of
the Lender Group (or any member thereof) to make all Advances (or to extend any
other credit hereunder) shall be subject to the following conditions precedent:
(a) the representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct in all material respects
on and as of the date of such extension of credit, as though made on and as of
such date (except to the extent that such representations and warranties relate
solely to an earlier date),
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof,
(c) no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any Governmental Authority against any
Borrower, Agent, any Lender, or any of their Affiliates, and
(d) no Material Adverse Change shall have occurred.
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3.4 Term. This Agreement shall continue in full force and effect for a
term ending on October 30, 2005 (the "Maturity Date"). The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5 Effect of Termination. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to outstanding Letters of Credit and including all Bank Product
Obligations) immediately shall become due and payable without notice or demand
(including (a) either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the then extant Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender, and (b) providing cash
collateral to be held by Agent for the benefit of Xxxxx Fargo or its Affiliates
with respect to the then extant Bank Product Obligations). No termination of
this Agreement, however, shall relieve or discharge Borrowers of their duties,
Obligations, or covenants hereunder and the Agent's Liens in the Collateral
shall remain in effect until all Obligations have been fully and finally
discharged and the Lender Group's obligations to provide additional credit
hereunder have been terminated. When this Agreement has been terminated and all
of the Obligations have been fully and finally discharged and the Lender Group's
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Agent will, at Borrowers' sole expense, execute and
deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent's Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
3.6 Early Termination by Borrowers. Borrowers have the option, at any time
upon at least 60 days prior written notice by Administrative Borrower to Agent,
to terminate this Agreement by paying to Agent, for the benefit of the Lender
Group and any provider of a Bank Product, in cash, the Obligations (including
(a) either (i) providing cash collateral to be held by Agent for the benefit of
those Lenders with a Revolver Commitment in an amount equal to 105% of the then
extant Letter of Credit Usage, or (ii) causing the original Letters of Credit to
be returned to the Issuing Lender, and (b) providing cash collateral to be held
by Agent for the benefit of Xxxxx Fargo or its Affiliates with respect to the
then extant Bank Product Obligations), in full, together with, and solely for
the account of the Lenders with a Revolver Commitment, the Applicable Prepayment
Premium (to be allocated based upon letter agreements between Agent and
individual Lenders). If Administrative Borrower has sent a notice of termination
pursuant to the provisions of this Section, then the Commitments shall terminate
and Borrowers shall be obligated to repay the Obligations (including (a) either
(i) providing cash collateral to be held by Agent for the benefit of those
Lenders with a Revolver Commitment in an amount equal to 105% of the then extant
Letter of Credit Usage, or (ii) causing the original Letters of Credit to be
returned to the Issuing Lender, and (b) providing cash collateral to be held by
Agent for the benefit of Xxxxx Fargo or its Affiliates with respect to the then
extant Bank Product Obligations), in full, together with, and solely for the
account of the Lenders with a Revolver Commitment, the Applicable Prepayment
Premium, on the date set forth as the date of termination of this Agreement in
such notice. In the event of the termination of this Agreement and repayment of
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the Obligations at any time prior to the Maturity Date, for any other reason,
including (w) termination upon the election of the Required Lenders to terminate
after the occurrence of an Event of Default, (x) foreclosure and sale of
Collateral, (y) sale of the Collateral in any Insolvency Proceeding, or (z)
restructure, reorganization, or compromise of the Obligations by the
confirmation of a plan of reorganization, or any other plan of compromise,
restructure, or arrangement in any Insolvency Proceeding, then, in view of the
impracticability and extreme difficulty of ascertaining the actual amount of
damages to the Lender Group or profits lost by the Lender Group as a result of
such early termination, and by mutual agreement of the parties as to a
reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrowers shall pay the Applicable Prepayment Premium to Agent,
for the account of the Lenders with a Revolver Commitment, measured as of the
date of such termination. Anything contained in this Section 3.6 or any other
provision of this Agreement to the contrary notwithstanding, so long as no Event
of Default has occurred or is continuing, no Applicable Prepayment Premium shall
be due and payable (i) in connection with a refinancing of the Obligations by a
commercial banking unit of Xxxxx Fargo or (ii) in connection with the
consummation of the Acquisition. In the event Administrative Borrower requests
in writing that Agent provide a pay-off letter to Borrowers or any other lender
stating the amount necessary to repay in full all of the Obligations and obtain
a release of all of the Liens existing in favor of the Lender Group in and to
the Collateral, Agent shall promptly deliver to Administrative Borrower such
pay-off letter in form and substance satisfactory to Agent.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Each Borrower hereby grants to Agent, for
the benefit of the Lender Group and any provider of a Bank Product, a continuing
security interest in all of its right, title, and interest in all currently
existing and hereafter acquired or arising Personal Property Collateral in order
to secure prompt repayment of any and all of the Obligations in accordance with
the terms and conditions of the Loan Documents and in order to secure prompt
performance by Borrowers of each of their covenants and duties under the Loan
Documents. The Agent's Liens in and to the Personal Property Collateral shall
attach to all Personal Property Collateral without further act on the part of
Agent or Borrowers. Anything contained in this Agreement or any other Loan
Document to the contrary notwithstanding, except for Permitted Dispositions,
Borrowers have no authority, express or implied, to dispose of any item or
portion of the Collateral.
4.2 Negotiable Collateral. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, the applicable Borrower, immediately upon the
request of Agent, shall endorse and deliver physical possession of such
Negotiable Collateral to Agent.
4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrowers that the Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Each Borrower agrees that it
will hold in
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trust for the Lender Group, as the Lender Group's trustee, any Collections that
it receives and immediately will deliver said Collections to Agent or a Cash
Management Bank in their original form as received by the applicable Borrower.
4.4 Delivery of Additional Documentation Required. At any time upon the
request of Agent, Borrowers shall execute and deliver to Agent, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, PPSA Filings, security agreements, pledges,
assignments, endorsements of certificates of title (other than those
endorsements of certificates of title pertaining to assets of Borrowers as
determined by Agent), and all other documents (the "Additional Documents") that
Agent may request in its Permitted Discretion, in form and substance
satisfactory to Agent, to perfect and continue perfected or better perfect the
Agent's Liens in the Collateral (whether now owned or hereafter arising or
acquired), to create and perfect Liens in favor of Agent in any Real Property
acquired after the Closing Date, and in order to fully consummate all of the
transactions contemplated hereby and under the other Loan Documents. To the
maximum extent permitted by applicable law, each Borrower authorizes Agent to
execute any such Additional Documents in the applicable Borrower's name and
authorize Agent to file such executed Additional Documents in any appropriate
filing office. In addition, on such periodic basis as Agent shall require,
Borrowers shall (a) provide Agent with a report of all new patentable,
copyrightable, or trademarkable materials acquired or generated by Borrowers
during the prior period, (b) cause all patents, copyrights, and trademarks
acquired or generated by Borrowers that are not already the subject of a
registration with the appropriate filing office (or an application therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner sufficient to impart constructive notice of Borrowers' ownership thereof,
and (c) cause to be prepared, executed, and delivered to Agent supplemental
schedules to the applicable Loan Documents to identify such patents, copyrights,
and trademarks as being subject to the security interests created thereunder.
4.5 Power of Attorney. Each Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Borrower's name on any invoice
or xxxx of lading relating to the Collateral, drafts against Account Debtors, or
notices to Account Debtors, (c) send requests for verification of Accounts, (d)
endorse such Borrower's name on any Collection item that may come into the
Lender Group's possession, (e) at any time that an Event of Default has occurred
and is continuing, make, settle, and adjust all claims under such Borrower's
policies of insurance and make all determinations and decisions with respect to
such policies of insurance, and (f) at any time that an Event of Default has
occurred and is continuing, settle and adjust disputes and claims respecting the
Accounts, chattel paper, or General Intangibles directly with Account Debtors,
for amounts and upon terms that Agent determines to be reasonable, and Agent may
cause to be executed and delivered any documents and releases that Agent
determines to be necessary. The appointment of Agent as each Borrower's
attorney, and each and every one of its rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully and
finally repaid and performed and the Lender Group's obligations to extend credit
hereunder are terminated.
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4.6 Right to Inspect. Subject to Sections 2.1(b) and 2.11(c), Agent and
each Lender (through any of their respective officers, employees, or agents)
shall have the right, from time to time hereafter to inspect the Books and to
check, test, and appraise the Collateral in order to verify Borrowers' financial
condition or the amount, quality, value, condition of, or any other matter
relating to, the Collateral.
4.7 Control Agreements. Each Borrower agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under Section 7.19
and, if to another securities intermediary, unless each of the applicable
Borrower, Agent, and the substitute securities intermediary have entered into a
Control Agreement (except as set forth in Section 7.13). No arrangement
contemplated hereby or by any Control Agreement in respect of any Securities
Accounts or other Investment Property shall be modified by Borrowers without the
prior written consent of Agent. Upon the occurrence and during the continuance
of a Default or Event of Default, Agent may notify any securities intermediary
to liquidate the applicable Securities Account or any related Investment
Property maintained or held thereby and remit the proceeds thereof to the
Agent's Account. So long as no Event of Default has occurred and is continuing,
Borrowers shall be permitted to make withdrawals in respect of each of their
respective DDAs that is subject to a Control Agreement.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, each
Borrower makes the following representations and warranties to the Lender Group
which shall be true, correct, and complete, in all material respects, as of the
date hereof, and shall be true, correct, and complete, in all material respects,
as of the Closing Date, and at and as of the date of the making of each Advance
(or other extension of credit) made thereafter, as though made on and as of the
date of such Advance (or other extension of credit) (except to the extent that
such representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 No Encumbrances. Each Borrower has good and indefeasible title to its
Collateral and the Real Property, free and clear of Liens except for Permitted
Liens.
5.2 Eligible Accounts. The Eligible Accounts are bona fide existing
payment obligations of Account Debtors created by the sale and delivery of
Inventory or the rendition of services to such Account Debtors in the ordinary
course of Borrowers' business, owed to Borrowers without defenses, disputes,
offsets, counterclaims, or rights of return or cancellation. As to each Account
that is identified by Administrative Borrower as an Eligible Account in the
Borrowing Base Certificate submitted to Agent, such Account is not excluded as
ineligible by virtue of one or more of the excluding criteria set forth in the
definition of Eligible Accounts.
5.3 Eligible Inventory. All Eligible Inventory is of good and merchantable
quality, free from defects. As to each item of Inventory that is identified by
Administrative Borrower as Eligible Inventory in a borrowing base report
submitted to Agent, such Inventory is not excluded as ineligible by virtue of
one or more of the excluding criteria set forth in the definition of Eligible
Inventory.
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5.4 Equipment. All of the Equipment is used or held for use in Borrowers'
business and is fit for such purposes.
5.5 Location of Inventory and Equipment. The Inventory and Equipment are
not stored with a bailee, warehouseman, or similar party and are located only at
the locations identified on Schedule 5.5.
5.6 Inventory Records. Each Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.
5.7 Location of Chief Executive Office; FEIN. The chief executive office
of each Borrower is located at the address indicated in Schedule 5.7 and each
Borrower's FEIN is identified in Schedule 5.7.
5.8 Due Organization and Qualification; Subsidiaries.
(a) Each Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the issued and outstanding capital Stock of each Borrower, by
class, and, as of the Closing Date, a description of the number of shares of
each such class that are issued and outstanding. Other than as described on
Schedule 5.8(b), there are no subscriptions, options, warrants, or calls
relating to any shares of each Borrower's capital Stock, including any right of
conversion or exchange under any outstanding security or other instrument. No
Borrower is subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital Stock or any security
convertible into or exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate list of
each Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction
of their organization, (ii) the number of shares of each class of common and
preferred Stock issued and outstanding for each of such Subsidiaries, and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by the applicable Borrower. All of the outstanding
capital Stock of each such Subsidiary has been validly issued and is fully paid
and non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of any
Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Borrower or any
of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any
Borrower's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
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5.9 Due Authorization; No Conflict.
(a) As to each Borrower, the execution, delivery, and performance by
such Borrower of this Agreement and the Loan Documents to which it is a party
have been duly authorized by all necessary action on the part of such Borrower.
(b) The execution, delivery, and performance by such Borrower of
this Agreement and the other Loan Documents to which it is a party do not and
will not (i) violate any provision of federal, state, or local law or regulation
applicable to any Borrower, the Governing Documents of any Borrower, or any
order, judgment, or decree of any court or other Governmental Authority binding
on any Borrower, (ii) conflict with, result in a breach of, or constitute (with
due notice or lapse of time or both) a default under any material contractual
obligation of any Borrower, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
any Borrower, other than Permitted Liens, or (iv) require any approval of any
Borrower's stockholders or any approval or consent of any Person under any
material contractual obligation of any Borrower.
(c) Other than the filing of financing statements, and fixture
filings, the execution, delivery, and performance by each Borrower of this
Agreement and the Loan Documents to which such Borrower is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority or other Person.
(d) As to each Borrower, this Agreement and the other Loan Documents
to which such Borrower is a party, and all other documents required to be
executed by a Borrower hereby and thereby, when executed and delivered by such
Borrower will be the legally valid and binding obligations of such Borrower,
enforceable against such Borrower in accordance with their respective terms,
except as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally.
(e) The Agent's Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens.
(f) The execution, delivery, and performance by Guarantor of the
Loan Documents to which it is a party have been duly authorized by all necessary
action on the part of Guarantor.
(g) The execution, delivery, and performance by Guarantor of the
Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to Guarantor,
the Governing Documents of Guarantor, or any order, judgment, or decree of any
court or other Governmental Authority binding on Guarantor, (ii) conflict with,
result in a breach of, or constitute (with due notice or lapse of time or both)
a default under any material contractual obligation of Guarantor, (iii) result
in or require the creation or imposition of any Lien of any nature whatsoever
upon any properties or assets of Guarantor, other than Permitted Liens, or (iv)
require any approval of Guarantor's stockholders or any approval or consent of
any Person under any material contractual obligation of Guarantor.
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(h) The execution, delivery, and performance by Guarantor of the
Loan Documents to which Guarantor is a party do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any Governmental Authority or other Person.
(i) The Loan Documents to which Guarantor is a party, and all other
documents required to be executed by a Borrower hereby and thereby, when
executed and delivered by Guarantor will be the legally valid and binding
obligations of Guarantor, enforceable against Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
5.10 Litigation. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrowers, threatened against Borrowers, or any of their Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that,
if decided adversely to Borrowers, or any of their Subsidiaries, as applicable,
reasonably could not be expected to result in a Material Adverse Change.
5.11 No Material Adverse Change. All financial statements relating to
Borrowers or Guarantor that have been delivered by Borrowers to the Lender Group
have been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and present fairly in all material respects, Borrowers' (or
Guarantor's, as applicable) financial condition as of the date thereof and
results of operations for the period then ended. There has not been a Material
Adverse Change with respect to Borrowers (or Guarantor, as applicable) since the
date of the latest financial statements submitted to the Lender Group on or
before the Closing Date.
5.12 Fraudulent Transfer.
(a) Parent, Borrowers and their respective Subsidiaries, taken as a
whole, are Solvent.
(b) No transfer of property is being made by any Borrower or
Guarantor and no obligation is being incurred by any Borrower or Guarantor in
connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Borrowers or Guarantor.
5.13 Employee Benefits. None of Borrowers, any of their Subsidiaries, or
any of their ERISA Affiliates maintains or contributes to any Benefit Plan.
5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a) to
Borrowers' knowledge, none of Borrowers' properties or assets has ever been used
by Borrowers or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such production, storage, handling, treatment, release or transport was in
violation, in any material respect, of applicable Environmental Law, (b) to
Borrowers' knowledge, none of Borrowers' properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous
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Materials disposal site, (c) none of Borrowers have received notice that a Lien
arising under any Environmental Law has attached to any revenues or to any Real
Property owned or operated by Borrowers, and (d) none of Borrowers have received
a summons, citation, notice, or directive from the Environmental Protection
Agency or any other federal or state governmental agency concerning any action
or omission by any Borrower resulting in the releasing or disposing of Hazardous
Materials into the environment.
5.15 Brokerage Fees. Other than fees paid to Xxxx Capital Partners,
Borrowers have not utilized the services of any broker or finder in connection
with Borrowers' obtaining financing from the Lender Group under this Agreement
and no brokerage commission or finders fee is payable by Borrowers in connection
herewith.
5.16 Intellectual Property. Each Borrower owns, or holds licenses in, all
trademarks, trade names, copyrights, patents, patent rights, and licenses that
are necessary to the conduct of its business as currently conducted. Attached
hereto as Schedule 5.16 is a true, correct, and complete listing of all material
patents, patent applications, trademarks, trademark applications, copyrights,
and copyright registrations as to which each Borrower is the owner or is an
exclusive licensee.
5.17 Leases. Borrowers enjoy peaceful and undisturbed possession under all
leases material to the business of Borrowers and to which Borrowers are a party
or under which Borrowers are operating. All of such leases are valid and
subsisting and no material default by Borrowers exists under any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of the DDAs of each
Borrower, including, with respect to each depository (i) the name and address of
that depository, and (ii) the account numbers of the accounts maintained with
such depository.
5.19 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of Borrowers in writing to Agent or any Lender
(including all information contained in the schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents, or any transaction contemplated herein or therein is, and all
such factual information (taken as a whole) hereafter furnished by or on behalf
of Borrowers in writing to Agent or any Lender will be, true and accurate, in
all material respects, on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Projections represent (or, as
applicable, will represent), and as of the date on which any other Projections
are delivered to Agent, such additional Projections represent Borrowers' good
faith best estimate of its future performance for the periods covered thereby.
5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete list
of all Indebtedness of each Borrower outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date and such
schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.
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6. AFFIRMATIVE COVENANTS.
Each Borrower and Parent covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrowers and Parent shall and shall cause each of their respective
Subsidiaries to do all of the following:
6.1 Accounting System. Maintain a system of accounting that enables
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrowers also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
6.2 Collateral Reporting. Provide Agent (and if so requested by Agent,
with copies for each Lender) with the following documents at the following times
in form satisfactory to Agent:
================================================================================
Daily (a) a sales journal, collection journal, and credit
register since the last such schedule and a calculation
of the Borrowing Base as of such date, and
(b) notice of all returns, disputes, or claims,
--------------------------------------------------------------------------------
Weekly (c) Inventory reports specifying each Borrower's cost
and the wholesale market value of its Inventory, by
category, with additional detail showing additions to
and deletions from the Inventory,
(d) a detailed calculation of the Borrowing Base
(including detail regarding those Accounts that are not
Eligible Accounts),
(e) a detailed aging, by total, of the Accounts,
together with a reconciliation to the detailed
calculation of the Borrowing Base previously provided to
Agent, and
(f) a summary aging, by vendor, of Borrowers' accounts
payable and any book overdraft,
--------------------------------------------------------------------------------
Monthly (not later (g) a calculation of Dilution for the prior month, and
than the 10th day
of each month) (h) any information as Agent may request relative to the
occurrence of a Triggering Event,
--------------------------------------------------------------------------------
Quarterly (h) a detailed list of each Borrower's customers, and
(i) a report regarding each Borrower's accrued, but
unpaid, ad valorem taxes,
--------------------------------------------------------------------------------
Upon request by Agent (j) copies of invoices in connection with the Accounts,
credit memos, remittance advices, deposit slips,
shipping and delivery documents in connection with the
Accounts and, for Inventory and Equipment acquired
by Borrowers, purchase orders and invoices, and
(k) such other reports as to the Collateral, or the
financial condition of Borrowers as Agent may request.
================================================================================
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In addition, each Borrower agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 Financial Statements, Reports, Certificates. Deliver to Agent, with
copies to each Lender:
(a) as soon as available, but in any event within 30 days (45 days
in the case of a month that is the end of one of the first 3 fiscal quarters in
a fiscal year) after the end of each month during each of Parent's fiscal years,
(a) a company prepared consolidated balance sheet, income statement,
and statement of cash flow covering Parent's, its Subsidiaries' and the Excluded
Subsidiaries' operations during such period,
(b) a certificate signed by the chief financial officer and chief
executive officer of Parent to the effect that:
(A) the financial statements delivered hereunder have been
prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and
fairly present in all material respects the financial
condition of Parent, its Subsidiaries, and the Excluded
Subsidiaries,
(B) the representations and warranties of Borrowers contained
in this Agreement and the other Loan Documents are true and
correct in all material respects on and as of the date of such
certificate, as though made on and as of such date (except to
the extent that such representations and warranties relate
solely to an earlier date), and
(C) there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent
of any non-compliance, describing such non-compliance as to
which he or she may have knowledge and what action Borrowers
have taken, are taking, or propose to take with respect
thereto), and
(c) for each month that is the date on which a financial covenant in
Section 7.20 is to be tested, a Compliance Certificate demonstrating, in
reasonable detail, compliance at the end of such period with the applicable
financial covenants contained in Section 7.20, and
(b) as soon as available, but in any event within 90 days after the
end of each of Parent's fiscal years,
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(a) consolidated financial statements of Parent, its Subsidiaries
and the Excluded Subsidiaries, for each such fiscal year, audited by independent
certified public accountants reasonably acceptable to Agent and certified,
without any qualifications, by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a balance
sheet, income statement, and statement of cash flow and, if prepared, such
accountants' letter to management),
(b) a certificate of such accountants addressed to Agent and the
Lenders stating that such accountants do not have knowledge of the existence of
any Default or Event of Default under Section 7.20,
(c) as soon as available, but in any event within 5 Business Days
prior to the start of each of Parent's fiscal years,
(a) copies of Parent's Projections, in form and substance (including
as to scope and underlying assumptions) satisfactory to Agent, in its sole
discretion, for the forthcoming 3 years, year by year, and for the forthcoming
fiscal year, month by month, certified by the chief financial officer of Parent
as being such officer's good faith best estimate of the financial performance of
Parent, its respective Subsidiaries and the Excluded Subsidiaries during the
period covered thereby,
(d) if and when filed by Parent,
(a) Form 10-Q quarterly reports, Form 10-K annual reports, and Form
8-K current reports,
(b) any other reports made by Parent with the SEC,
(c) copies of Parent's federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service, and
(d) any other information that is provided by Parent to its
shareholders generally,
(e) if and when filed by any Borrower and as requested by Agent,
satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which (i) any Borrower conducts business or is required to pay
any such excise tax, (ii) where any Borrower's failure to pay any such
applicable excise tax would result in a Lien on the properties or assets of any
Borrower, or (iii) where any Borrower's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,
(f) as soon as a Borrower has knowledge of any event or condition
that constitutes a Default or an Event of Default, notice thereof and a
statement of the curative action that Borrowers propose to take with respect
thereto, and
(g) upon the request of Agent, any other report reasonably requested
relating to the financial condition of Borrowers.
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In addition to the financial statements referred to above, Borrowers agree
to deliver financial statements for Borrowers and Parent prepared on both a
consolidated and consolidating basis and that no Borrower, any Subsidiary of a
Borrower, or any Excluded Subsidiary will have a fiscal year different from that
of Parent. Borrowers agree that their independent certified public accountants
are authorized to communicate with Agent and to release to Agent whatever
financial information concerning Borrowers that Agent reasonably may request.
Each Borrower agrees that Agent may contact directly any such accounting firm or
service bureau in order to obtain such information.
6.4 Guarantor Reports. Cause any Guarantor (other than Parent) to deliver
its annual financial statements at the time when Borrowers and Parent provides
their audited financial statements to Agent and copies of all federal income tax
returns as soon as the same are available and in any event no later than 30 days
after the same are required to be filed by law.
6.5 Return. Cause returns and allowances, as between Borrowers and their
Account Debtors, to be on the same basis and in accordance with the usual
customary practices of the applicable Borrower, as they exist at the time of the
execution and delivery of this Agreement. If, at a time when no Event of Default
has occurred and is continuing, any Account Debtor returns any Inventory to any
Borrower, the applicable Borrower promptly shall determine the reason for such
return and, if the applicable Borrower accepts such return, issue a credit
memorandum (with a copy to be sent to Agent) in the appropriate amount to such
Account Debtor. If, at a time when an Event of Default has occurred and is
continuing, any Account Debtor returns any Inventory to any Borrower and the
aggregate amount of such returns exceed $250,000 during any fiscal year, the
applicable Borrower promptly shall determine the reason for such return and, if
Agent consents (which consent shall not be unreasonably withheld), issue a
credit memorandum (with a copy to be sent to Agent) in the appropriate amount to
such Account Debtor.
6.6 Maintenance of Properties. Maintain and preserve all of its properties
which are necessary or useful in the proper conduct to its business in good
working order and condition, ordinary wear and tear excepted, and comply at all
times in all material respects with the provisions of all leases to which it is
a party as lessee, so as to prevent any loss or forfeiture thereof or
thereunder.
6.7 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrowers
or Parent or any of their assets to be paid in full, before delinquency or
before the expiration of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted Protest.
Borrowers and Parent will make timely payment or deposit of all tax payments and
withholding taxes required of it by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Agent with proof satisfactory to
Agent indicating that the applicable Borrower or Parent has made such payments
or deposits. Borrowers and Parent shall deliver satisfactory evidence of payment
of applicable excise taxes in each jurisdictions in which any Borrower or Parent
is required to pay any such excise tax.
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6.8 Insurance.
(a) At Borrowers' or Parent's expense, maintain insurance respecting
their property and assets wherever located, covering loss or damage by fire,
theft, explosion, and all other hazards and risks as ordinarily are insured
against by other Persons engaged in the same or similar businesses. Borrowers
and Parent also shall maintain business interruption, public liability, and
product liability insurance, as well as insurance against larceny, embezzlement,
and criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrowers and Parent shall deliver copies of all such policies to Agent
with a satisfactory lender's loss payable endorsement naming Agent as sole loss
payee or additional insured, as appropriate. Each policy of insurance or
endorsement shall contain a clause requiring the insurer to give not less than
30 days prior written notice to Agent in the event of cancellation of the policy
for any reason whatsoever.
(b) Administrative Borrower shall give Agent prompt notice of any
loss covered by such insurance. Agent shall have the exclusive right to adjust
any losses payable under any such insurance policies in excess of $50,000,
without any liability to Borrowers whatsoever in respect of such adjustments.
Any monies received as payment for any loss under any insurance policy mentioned
above (other than liability insurance policies) or as payment of any award or
compensation for condemnation or taking by eminent domain, shall be paid over to
Agent to be applied at the option of the Required Lenders either to the
prepayment of the Obligations or shall be disbursed to Administrative Borrower
under staged payment terms reasonably satisfactory to the Required Lenders for
application to the cost of repairs, replacements, or restorations. Any such
repairs, replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items of
property destroyed prior to such damage or destruction.
(c) Borrowers or Parent shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained under this Section 6.8, unless Agent is included thereon as named
insured with the loss payable to Agent under a lender's loss payable endorsement
or its equivalent. Administrative Borrower immediately shall notify Agent
whenever such separate insurance is taken out, specifying the insurer thereunder
and full particulars as to the policies evidencing the same, and copies of such
policies promptly shall be provided to Agent.
6.9 Location of Inventory and Equipment. Keep the Inventory and Equipment
only at the locations identified on Schedule 5.5; provided, however, that
Administrative Borrower may amend Schedule 5.5 so long as such amendment occurs
by written notice to Agent not less than 30 days prior to the date on which the
Inventory or Equipment is moved to such new location, so long as such new
location is within the continental United States, and so long as, at the time of
such written notification, the applicable Borrower or Parent provides any
financing statements, fixture filings, or PPSA Filings necessary to perfect and
continue perfected the Agent's Liens on such assets and also provides to Agent a
Collateral Access Agreement.
6.10 Compliance with Laws. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the
77
non-compliance with which, individually or in the aggregate, reasonably could
not be expected to result in a Material Adverse Change.
6.11 Leases. Pay when due all rents and other amounts payable under any
leases to which any Borrower or Parent is a party or by which any Borrower's or
Parent's properties and assets are bound, unless such payments are the subject
of a Permitted Protest.
6.12 Brokerage Commissions. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrowers' obtaining
financing from the Lender Group under this Agreement. Borrowers and Parent agree
and acknowledge that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Borrowers or Parent, and each Borrower and
Parent agree to indemnify, defend, and hold Agent and the Lender Group harmless
from and against any claim of any broker or finder arising out of Borrowers'
obtaining financing from the Lender Group under this Agreement.
6.13 Existence. At all times preserve and keep in full force and effect
each Borrower's and Parent's valid existence and good standing and any rights
and franchises material to Borrowers' or Parent `s businesses.
6.14 Environmental.
(a) Keep any property either owned or operated by any Borrower or
Parent free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance which Agent
reasonably requests, (c) promptly notify Agent of any release of a Hazardous
Material in any reportable quantity from or onto property owned or operated by
any Borrower or Parent and take any Remedial Actions required to xxxxx said
release or otherwise to come into compliance with applicable Environmental Law,
and (d) promptly provide Agent with written notice within 10 days of the receipt
of any of the following: (i) notice that an Environmental Lien has been filed
against any of the real or personal property of any Borrower or Parent, (ii)
commencement of any Environmental Action or notice that an Environmental Action
will be filed against any Borrower or Parent, and (iii) notice of a violation,
citation, or other administrative order which reasonably could be expected to
result in a Material Adverse Change.
6.15 Disclosure Updates. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, schedule, exhibit, or report furnished to the Lender Group
contained any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made, and (b) correct any defect or error
that may be discovered therein or in any Loan Document or in the execution,
acknowledgement, filing, or recordation thereof.
6.16 Additional Guarantor. In the event Egarden generates revenues in the
amount of at least $25,000 during any fiscal year, Parent or Borrowers shall
cause Egarden to become a Guarantor and Parent shall deliver a stock pledge
agreement, in form and substance satisfactory
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to Agent, executed and delivered by Parent to Agent with respect to the pledge
of the Stock of Egarden owned by Parent.
7. NEGATIVE COVENANTS.
Each Borrower and Parent covenant and agree that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrowers or Parent will not and will not permit any of their
respective Subsidiaries to do any of the following:
7.1 Indebtedness. Create, incur, assume, permit, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit;
(b) Indebtedness set forth on Schedule 5.20;
(c) Permitted Purchase Money Indebtedness;
(d) Subordinated Indebtedness;
(e) refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b), and (c) of this Section 7.1 (and continuance or renewal of
any Permitted Liens associated therewith) so long as: (i) the terms and
conditions of such refinancings, renewals, or extensions do not, in Agent's
judgment, materially impair the prospects of repayment of the Obligations by
Borrowers or Parent or materially impair Borrowers' or Parent's
creditworthiness, (ii) such refinancings, renewals, or extensions do not result
in an increase in the principal amount of, or interest rate with respect to, the
Indebtedness so refinanced, renewed, or extended, (iii) such refinancings,
renewals, or extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions, that, taken as a whole, are materially more burdensome
or restrictive to the applicable Borrower or Parent, and (iv) if the
Indebtedness that is refinanced, renewed, or extended was subordinated in right
of payment to the Obligations, then the terms and conditions of the refinancing,
renewal, or extension Indebtedness must include subordination terms and
conditions that are at least as favorable to the Lender Group as those that were
applicable to the refinanced, renewed, or extended Indebtedness; and
(f) Indebtedness comprising Permitted Investments.
7.2 Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(e) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
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7.3 Restrictions on Fundamental Changes.
(a) Enter into any merger or consolidation (other than a merger or
consolidation between or amongst the Borrowers so long as the surviving Borrower
together with the Parent, the other Borrowers, and their respective Subsidiaries
taken as a whole, are Solvent after giving effect to such merger or
consolidation and Administrative Borrower gives 30 days written notice thereof
to Agent) reorganization, or recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Except as set forth in Section 7.4, convey, sell, lease,
license, assign, transfer, or otherwise dispose of, in one transaction or a
series of transactions, all or any substantial part of its assets.
7.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of the assets of
any Borrower or Parent; provided, however, that Borrowers or Parent may convey,
sell, assign, or transfer their assets to Purchaser pursuant to the Acquisition
Documents so long as:
(a) no Event of Default has occurred and is continuing,
(b) the Acquisition is consummated pursuant to the terms of the
Acquisition Documents by no later than June 30, 2003,
(c) Agent and Ableco finance the Acquisition pursuant to the terms
of the Purchaser Loan Side Letter,
(d) Lenders shall receive approval from their respective credit
committees to enter into the Purchaser Loan Agreement,
(e) Agent shall have received copies of any proxy statements issued
by Parent and Borrowers with respect to the Acquisition,
(f) the Weed Wizard Litigation shall not have been assumed by
Purchaser,
(g) Parent's obligations under the Subordinated Junior Debt
Documents shall have been assumed by Purchaser or an Affiliate of Purchaser,
which transfer and assignment of the Subordinated Indebtedness shall have been
(i) duly approved by the note holders of the Subordinated Indebtedness, the
respective board of directors of Parent, Purchaser and, if applicable, such
Affiliate of Purchaser, and any Governmental Authority, and (ii) in accordance
with the provisions set forth in the Subordinated Junior Debt Documents; all of
which shall be subject to the Lender Group's satisfaction,
The foregoing notwithstanding, nothing contained herein shall be construed
to obligate the Lenders to finance the Acquisition and Borrowers and Parent
acknowledge that this Agreement is entered into for the sole protection and
benefit of the parties hereto and their
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successors and permitted assigns (not including Purchaser), and no other Person
shall be a direct or indirect beneficiary of, or shall have any direct or
indirect cause of action or claim in connection with, this Agreement.
7.5 Change Name. Change any Borrower's or Parent's name, FEIN, corporate
structure, or identity, or add any new fictitious name; provided, however, that
a Borrower or Parent may change its name upon at least 30 days prior written
notice by Administrative Borrower to Agent of such change and so long as, at the
time of such written notification, such Borrower or Parent provides any
financing statements or fixture filings necessary to perfect and continue
perfected Agent's Liens.
7.6 Guarantee. Except for those guarantees set forth on Schedule 7.6,
Guarantee or otherwise become in any way liable with respect to the obligations
of any third Person except by endorsement of instruments or items of payment for
deposit to the account of Borrowers or Parent or which are transmitted or turned
over to Lenders.
7.7 Nature of Business. Make any change in the principal nature of
Borrowers' or Parent's business.
7.8 Prepayments and Amendments.
(a) Except in connection with a refinancing permitted by Section
7.1(e), prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness
of any Borrower or Parent, other than the Obligations in accordance with this
Agreement,
(b) Make any payment on account of the Subordinated Indebtedness
(whether on account of principal, interest, fees or otherwise); provided,
however, that Parent may make (i) regularly scheduled payments of interest on
account of the Subordinated Indebtedness so long as no Event of Default has
occurred and is continuing or would result therefrom, (ii) the Permitted
Catch-Up Payments, and (iii) the Closing Catch-Up Payment, so long as (A) such
Closing Catch-Up Payment is made no later than November 4, 2002 and (B)
Borrowers have Required Availability after giving effect to such Closing
Catch-Up Payment.
(c) Except in connection with a refinancing permitted by Section 7.1(e),
directly or indirectly, amend, modify, alter, increase, or change any of the
terms or conditions of any agreement, instrument, document, indenture, or other
writing evidencing or concerning Indebtedness permitted under Section 7.1(b),
Section 7.1(c), or Section 7.1(d).
7.9 Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
7.10 Consignments. Consign any Inventory or sell any Inventory on xxxx and
hold, sale or return, sale on approval, or other conditional terms of sale.
7.11 Distributions. Except for Permitted Distributions, make any
distribution or declare or pay any dividends (in cash or other property, other
than common Stock) on, or purchase, acquire, redeem, or retire, any of any
Borrower's or Parent's Stock, of any class, whether now or hereafter
outstanding.
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7.12 Accounting Methods. Modify or change its method of accounting (other
than as may be required to conform to GAAP) or enter into, modify, or terminate
any agreement currently existing, or at any time hereafter entered into with any
third party accounting firm or service bureau for the preparation or storage of
Borrowers' or Parent's accounting records without said accounting firm or
service bureau agreeing to provide Agent information regarding the Collateral or
Borrowers' or Parent's financial condition.
7.13 Investments. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that (a) Parent and its Subsidiaries shall not have Permitted
Investments (other than in the Cash Management Accounts) in deposit accounts or
Securities Accounts in excess of $25,000 outstanding at any one time unless
Parent or its Subsidiaries, as applicable, and the applicable securities
intermediary or bank have entered into Control Agreements or similar
arrangements governing such Permitted Investments, as Agent shall determine in
its Permitted Discretion, to perfect (and further establish) the Agent's Liens
in such Permitted Investments, or (b) to the extent Permitted Investments in any
deposit account or Securities Account exceed $25,000, Borrowers shall, within 2
Business Days of the date such Permitted Investments in such deposit account or
Securities Account exceed $25,000, deposit the difference between (A) the amount
of cash in such deposit account or Securities Account as of such date and (B)
$25,000, into the Cash Management Account.
7.14 Transactions with Affiliates. Except for Permitted Affiliate
Transactions, directly or indirectly enter into or permit to exist any
transaction with any Affiliate of any Borrower or Parent except for transactions
that are in the ordinary course of Borrowers' or Parent's business, upon fair
and reasonable terms, that are fully disclosed to Agent, and that are no less
favorable to Borrowers or Parent than would be obtained in an arm's length
transaction with a non-Affiliate.
7.15 Suspension. Suspend or go out of a substantial portion of its
business.
7.16 Compensation. Increase the annual fee or per-meeting fees paid to the
members of its board of directors during any year by more than 15% over the
prior year; pay or accrue total cash compensation, during any year, to its
officers and senior management employees in an aggregate amount in excess of
115% of that paid or accrued in the prior year.
7.17 Use of Proceeds. Use the proceeds of the Advances and the Term Loan
for any purpose other than (a) on the Closing Date, (i) to repay, in full, the
outstanding principal, accrued interest, and accrued fees and expenses owing to
Existing Lender, and (ii) to pay transactional fees, costs, and expenses
incurred in connection with this Agreement, the other Loan Documents, and the
transactions contemplated hereby and thereby, and (b) thereafter, unless
prohibited by the terms and conditions hereof, for its lawful and permitted
purposes.
7.18 Change in Location of Chief Executive Office; Inventory and Equipment
with Bailees. (a) relocate its chief executive office to a new location without
Administrative Borrower providing 30 (or, in the case of a relocation within the
same state, 15) days prior written notification thereof to Agent and so long as,
at the time of such written notification, the applicable Borrower or Parent
provides any financing statements or fixture filings necessary to
82
perfect and continue perfected the Agent's Liens and also provides to Agent a
Collateral Access Agreement with respect to such new location (b) relocate to or
open a new location in Canada without providing 30 days prior written
notification thereof to Agent and so long as, at the time of such written
notification, Administrative Borrower provides any PPSA Filings necessary to
perfect and continue perfected the Agent's Liens and also provides to Agent a
Collateral Access Agreement with respect to such new location, if requested by
Agent. The Inventory and Equipment shall not at any time now or hereafter be
stored with a bailee, warehouseman, or similar party without Agent's prior
written consent, except for such bailees, warehousemen, or other similar parties
set forth on Schedule 7.18.
7.19 Securities Accounts. Except as set forth in Section 7.13, establish
or maintain any Securities Account unless Agent shall have received a Control
Agreement in respect of such Securities Account. Borrowers and Parent agree to
not transfer assets out of any Securities Account; provided, however, that, so
long as no Event of Default has occurred and is continuing or would result
therefrom, Borrowers or Parent may use such assets (and the proceeds thereof) to
the extent not prohibited by this Agreement.
7.20 Financial Covenants.
(a) Fail to maintain:
(a) Minimum EBITDA. EBITDA, measured on a fiscal quarter-end basis,
of at least the required amount set forth in the following table for the
applicable period set forth opposite thereto; provided, however, that for the 3
month period ending December 31, 2002, the negative amount of EBITDA shall not
be greater than $630,000.
--------------------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------------------------------------------------
$ 4,062,000 For the 6 month period
ending March 31, 2003
--------------------------------------------------------------------------------
$10,050,000 For the 9 month period
ending June 30, 2003
--------------------------------------------------------------------------------
$ 9,316,000 For the 12 month period
ending September 30, 2003
--------------------------------------------------------------------------------
$ 9,616,000 For the 12 month period
ending December 31, 2003
--------------------------------------------------------------------------------
$ 9,902,000 For the 12 month period
ending March 31, 2004
--------------------------------------------------------------------------------
$10,279,000 For the 12 month period
ending June 30, 2004
--------------------------------------------------------------------------------
$10,500,000 For the 12 month period
ending each fiscal quarter thereafter
--------------------------------------------------------------------------------
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(b) Funded Senior Debt Ratio. Commencing as of November 30, 2002,
Funded Senior Debt Ratio, measured on a fiscal month-end basis of no greater
than the applicable ratios set forth in the following table for the applicable
fiscal month-end set forth opposite thereto:
--------------------------------------------------------------------------------
Fiscal Month-End Funded Senior Debt Ratio
---------------- ------------------------
--------------------------------------------------------------------------------
July 31 and each fiscal
month-end thereafter
through December 31 3:1
--------------------------------------------------------------------------------
January 31 and each fiscal
month-end thereafter
through June 30 3.5:1
--------------------------------------------------------------------------------
For purposes of this Section 7.20(a), the Excluded Subsidiaries shall be
included in the computation of (y) the applicable amount of minimum EBITDA
required in clause (i) hereof, and (z) the Funded Senior Debt Ratio required in
clause (ii) hereof.
(b) Make:
(a) Capital Expenditures. Capital expenditures in any fiscal year in
excess of $1,500,000.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If Borrowers or Parent fail to pay when due and payable, or when
declared due and payable, all or any portion of the Obligations (whether of
principal, interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due the
Lender Group, reimbursement of Lender Group Expenses, or other amounts
constituting Obligations);
8.2 If Borrowers or Parent fail to perform, keep, or observe (a) any term,
provision, condition, covenant, or agreement contained in Section 6.2 hereof and
such failure or neglect continues for a period of 5 Business Days after the date
on which such failure or neglect first occurs; or (b) any covenant or other
provision contained in Sections 6.3, 6.4, 6.7, 6.9, 6.11 or
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6.14 hereof and such failure or neglect continues for a period of 15 days after
the date on which such failure or neglect first occurs; or (c) any other
covenant or other provision contained in any Section of this Agreement (other
than a Section that is expressly dealt with elsewhere in this Section 8) or the
other Loan Documents;
8.3 If any material portion of Parent's or a Borrower's assets, in an
amount equal to or greater than $250,000 in the aggregate, is attached, seized,
subjected to a writ or distress warrant, levied upon, or comes into the
possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by Parent or a Borrower;
8.5 If an Insolvency Proceeding is commenced against Parent, or a
Borrower, and any of the following events occur: (a) Parent or the applicable
Subsidiary consents to the institution of the Insolvency Proceeding against it,
(b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 45 calendar days of the date of the filing thereof; provided,
however, that, during the pendency of such period, Agent (including any
successor agent) and each other member of the Lender Group shall be relieved of
their obligation to extend credit hereunder, (d) an interim trustee is appointed
to take possession of all or any substantial portion of the properties or assets
of, or to operate all or any substantial portion of the business of, Parent or a
Borrower, or (e) an order for relief shall have been entered therein;
8.6 If Parent or a Borrower is enjoined, restrained, or in any way
prevented by court order from continuing to conduct all or any material part of
its business affairs;
8.7 (a) If a notice of Lien, levy, or assessment is filed of record with
respect to Parent's or a Borrower's properties or assets by the United States
Government, or any department, agency, or instrumentality thereof, or if any
taxes or debts owing at any time hereafter to any one or more of such entities
becomes a Lien, whether xxxxxx or otherwise, upon Parent's or a Borrower's
properties or assets and the same is not paid on the payment date thereof, or
(b) if notices of Lien, levy, or assessment in an aggregate amount in excess of
$250,000, are filed of record with respect to Parent's or a Borrower's
properties or assets by any state, province, county, municipal, or governmental
agency, or if any taxes or debts owing at any time hereafter to any one or more
of such entities becomes a Lien exceeding the foregoing aggregate limitation,
whether xxxxxx or otherwise, upon Parent's or a Borrower's properties or assets
and the same is not paid on the payment date thereof;
8.8 If a judgment or other claim becomes a Lien or encumbrance, which has
or may take priority over Agent's Lien or relates to an obligation in excess of
$125,000 (exclusive of judgment amounts fully covered by insurance where the
insurer has admitted liability, in writing and without qualification, in respect
of such judgment or claim), upon any material portion of Parent's or a
Borrower's properties or assets;
8.9 If there is a default in any material agreement to which Parent or a
Borrower is a party and such default (a) occurs at the final maturity
85
of the obligations thereunder, or (b) results in a right by the other party
thereto, irrespective of whether exercised, to accelerate the maturity of
Parent's or a Borrower's obligations thereunder, to terminate such agreement, or
to refuse to renew such agreement pursuant to an automatic renewal right
therein;
8.10 If Parent or any Borrower makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to the
payment of the Obligations, including, without limitation, the Subordinated
Indebtedness, except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness;
8.11 If any misstatement or misrepresentation exists now or hereafter in
any warranty, representation, statement, or Record made to the Lender Group by
Parent, a Borrower, or any officer, employee, agent, or director of Parent or
any Borrower;
8.12 If the obligation of Guarantor under the Guaranty is limited or
terminated by operation of law or by Guarantor thereunder (excluding any
limitation resulting from an Insolvency Proceeding of Weed Wizard); or
8.13 If this Agreement or any other Loan Document that purports to create
a Lien, shall, for any reason, fail or cease to create a valid and perfected
and, except to the extent permitted by the terms hereof or thereof, first
priority Lien on or security interest in the Collateral covered hereby or
thereby; or
8.14 Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by any Borrower or Parent, or a proceeding shall be commenced by
any Borrower or Parent, or by any Governmental Authority having jurisdiction
over any Borrower or Parent, seeking to establish the invalidity or
unenforceability thereof, or any Borrower or Parent shall deny that any Borrower
or Parent has any liability or obligation purported to be created under any Loan
Document.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the continuation,
of an Event of Default, the Required Lenders (at their election but without
notice of their election and without demand) may authorize and instruct Agent to
do any one or more of the following on behalf of the Lender Group (and Agent,
acting upon the instructions of the Required Lenders, shall do the same on
behalf of the Lender Group), all of which are authorized by Borrowers:
(a) Declare all Obligations, whether evidenced by this Agreement, by
any of the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit
of Borrowers under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents as
to any future liability or obligation of the Lender Group, but without affecting
any of the Agent's Liens in the Collateral and without affecting the
Obligations;
86
(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Agent considers advisable, and in such
cases, Agent will credit the Loan Account with only the net amounts received by
Agent in payment of such disputed Accounts after deducting all Lender Group
Expenses incurred or expended in connection therewith;
(e) Cause Borrowers to hold all returned Inventory in trust for the
Lender Group, segregate all returned Inventory from all other assets of
Borrowers or in Borrowers' possession and conspicuously label said returned
Inventory as the property of the Lender Group;
(f) Without notice to or demand upon any Borrower or Guarantor, make
such payments and do such acts as Agent considers necessary or reasonable to
protect its security interests in the Collateral. Each Borrower agrees to
assemble the Personal Property Collateral if Agent so requires, and to make the
Personal Property Collateral available to Agent at a place that Agent may
designate which is reasonably convenient to both parties. Each Borrower
authorizes Agent to enter the premises where the Personal Property Collateral is
located, to take and maintain possession of the Personal Property Collateral, or
any part of it, and to pay, purchase, contest, or compromise any Lien that in
Agent's determination appears to conflict with the Agent's Liens and to pay all
expenses incurred in connection therewith and to charge Borrowers' Loan Account
therefor. With respect to any of Borrowers' owned or leased premises, each
Borrower hereby grants Agent a license to enter into possession of such premises
and to occupy the same, without charge, in order to exercise any of the Lender
Group's rights or remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to any Borrower (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of any Borrower held by the
Lender Group (including any amounts received in the Cash Management Accounts),
or (ii) Indebtedness at any time owing to or for the credit or the account of
any Borrower held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and deposits of
any Borrower held by the Lender Group, and any amounts received in the Cash
Management Accounts, to secure the full and final repayment of all of the
Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Personal Property Collateral. Each Borrower hereby grants to Agent a license or
other right to use, without charge, such Borrower's labels, patents, copyrights,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any property of a similar nature, as it pertains to the Personal Property
Collateral, in completing production of, advertising for sale, and selling any
Personal Property Collateral and such Borrower's rights under all licenses and
all franchise agreements shall inure to the Lender Group's benefit;
(j) Sell the Personal Property Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for cash
or on terms, in such manner and
87
at such places (including Borrowers' premises) as Agent determines is
commercially reasonable. It is not necessary that the Personal Property
Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the Personal
Property Collateral as follows:
(a) Agent shall give Administrative Borrower (for the benefit of the
applicable Borrower) a notice in writing of the time and place of public sale,
or, if the sale is a private sale or some other disposition other than a public
sale is to be made of the Personal Property Collateral, the time on or after
which the private sale or other disposition is to be made; and
(b) The notice shall be personally delivered or mailed, postage
prepaid, to Administrative Borrower as provided in Section 12, at least 10 days
before the earliest time of disposition set forth in the notice; no notice needs
to be given prior to the disposition of any portion of the Personal Property
Collateral that is perishable or threatens to decline speedily in value or that
is of a type customarily sold on a recognized market;
(l) Agent, on behalf of the Lender Group, may credit bid and
purchase at any public sale; and
(m) Agent may seek the appointment of a receiver or keeper to take
possession of all or any portion of the Collateral or to operate same and, to
the maximum extent permitted by law, may seek the appointment of such a receiver
without the requirement of prior notice or a hearing;
(n) The Lender Group shall have all other rights and remedies
available to it at law or in equity or pursuant to any other Loan Documents; and
(o) Any deficiency that exists after disposition of the Personal
Property Collateral as provided above will be paid immediately by Borrowers. Any
excess will be returned, without interest and subject to the rights of third
Persons, by Agent to Administrative Borrower (for the benefit of the applicable
Borrower).
9.2 Remedies Cumulative. The rights and remedies of the Lender Group under
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, the PPSA, by law, or in
equity. No exercise by the Lender Group of one right or remedy shall be deemed
an election, and no waiver by the Lender Group of any Event of Default shall be
deemed a continuing waiver. No delay by the Lender Group shall constitute a
waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole
88
discretion and without prior notice to any Borrower, may do any or all of the
following; provided, however, that if any failure by a Borrower described above
in this Section 10 does not constitute an Event of Default and occurs when there
has not occurred any Event of Default which is continuing, then Agent may do any
or all of the following only if Agent shall have given notice of such failure to
Administrative Borrower and such failure is not cured within 3 Business Days
after the date of such notice: (a) make payment of the same or any part thereof,
(b) set up such reserves in Borrowers' Loan Account as Agent deems necessary to
protect the Lender Group from the exposure created by such failure, or (c) in
the case of the failure to comply with Section 6.8 hereof, obtain and maintain
insurance policies of the type described in Section 6.8 and take any action with
respect to such policies as Agent deems prudent. Any such amounts paid by Agent
shall constitute Lender Group Expenses and any such payments shall not
constitute an agreement by the Lender Group to make similar payments in the
future or a waiver by the Lender Group of any Event of Default under this
Agreement. Agent need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing. The foregoing notwithstanding, so long as no Event of Default has
occurred and is continuing, Agent shall not be permitted to satisfy any of the
obligations of Borrowers described in this Section 10 if any such payment
obligation is subject to a Permitted Protest and such Borrower has given Agent
written notice thereof.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any such Borrower may in any way be liable.
11.2 The Lender Group's Liability for Collateral. Each Borrower hereby
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code, the PPSA or any other applicable law, the Lender Group shall not in
any way or manner be liable or responsible for: (i) the safekeeping of the
Collateral, (ii) any loss or damage thereto occurring or arising in any manner
or fashion from any cause, (iii) any diminution in the value thereof, or (iv)
any act or default of any carrier, warehouseman, bailee, forwarding agency, or
other Person, and (b) all risk of loss, damage, or destruction of the Collateral
shall be borne by Borrowers.
11.3 Indemnification. Each Borrower shall pay, indemnify, defend, and hold
the Agent-Related Persons, the Lender-Related Persons with respect to each
Lender, each Participant, and each of their respective officers, directors,
employees, agents, and attorneys-in-fact (each, an "Indemnified Person")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
of this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby, and (b) with respect to any investigation,
litigation, or
89
proceeding related to this Agreement, any other Loan Document, or the use of the
proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event, or
circumstance in any manner related thereto (all the foregoing, collectively, the
"Indemnified Liabilities"). The foregoing to the contrary notwithstanding,
Borrowers shall have no obligation to any Indemnified Person under this Section
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrowers were required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrowers
with respect thereto. WITHOUT LIMITATION BUT SUBJECT TO THE THIRD PRECEDING
SENTENCE, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN ANY WAY OR TO ANY EXTENT IN WHOLE OR
IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON OR UNDER ANY CLAIM OR THEORY OF STRICT
LIABILITY.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Administrative Borrower or Agent to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, or telefacsimile
to Borrowers in care of Administrative Borrower or to Agent, as the case may be,
at its address set forth below:
If to Administrative
Borrower: EASY GARDENER, INC.
0000 Xxxxxxxx Xxxxxx
Xxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxx, Chief Financial Officer
Fax No. (000) 000-0000
with copies to: BLANK ROME XXXXXX XXXXXXXXXX LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx Xxxxxxx, Esq.
Fax No. (000) 000-0000
90
If to Agent: FOOTHILL CAPITAL CORPORATION
0000 Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Business Finance Division Manager
Fax No. (000) 000-0000
with copies to: MAYER, BROWN, XXXX & MAW
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxxx X. Xxxxxxxx, Xx., Esq.
Fax No. (000) 000-0000
Agent and Borrowers may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code and the PPSA, shall be deemed
received on the earlier of the date of actual receipt or 3 Business Days after
the deposit thereof in the mail. Each Borrower acknowledges and agrees that
notices sent by the Lender Group in connection with the exercise of enforcement
rights against Collateral under the provisions of the Code and the PPSA shall be
deemed sent when deposited in the mail or personally delivered, or, where
permitted by law, transmitted by telefacsimile or any other method set forth
above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE BOROUGH OF
MANHATTAN, COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY
SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS
TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
BORROWERS AND THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER
91
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 13(b).
(c) BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWERS AND THE LENDER GROUP REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations.
(a) Any Lender may, with the written consent of Agent (provided that
no written consent of Agent shall be required in connection with any assignment
and delegation by a Lender to an Eligible Transferee), assign and delegate to
one or more assignees (each an "Assignee") all, or any ratable part of all, of
the Obligations, the Commitments and the other rights and obligations of such
Lender hereunder and under the other Loan Documents, in a minimum amount of
$5,000,000 (except such minimum amount shall not apply to any Affiliate of a
Lender or to a Related Fund or account managed by a Lender provided that if the
minimum amount is not met Administrative Borrower and Agent may continue to deal
solely and directly with such Lender in connection with the interest so assigned
to an Assignee); provided, however, that Borrowers and Agent may continue to
deal solely and directly with such Lender in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses, and related information with respect to
the Assignee, have been given to Administrative Borrower and Agent by such
Lender and the Assignee, (ii) such Lender and its Assignee have delivered to
Administrative Borrower and Agent an Assignment and Acceptance in form and
substance satisfactory to Agent, and (iii) the assignor Lender or Assignee has
paid to Agent for Agent's separate account a processing fee in the amount of
$5,000. Anything contained herein to the contrary notwithstanding, the consent
of Agent shall not be required (and payment of any fees shall not be required)
if (y) such assignment is in connection with any merger, consolidation, sale,
transfer, or other disposition of all or any substantial portion of the business
or loan portfolio of such Lender or (z) the assignee is an Affiliate of a Lender
or a Related Fund.
(b) From and after the date that Agent notifies the assignor Lender
(with a copy to Administrative Borrower) that it has received an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the
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Loan Documents, and (ii) the assignor Lender shall, to the extent that rights
and obligations hereunder and under the other Loan Documents have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 11.3 hereof) and be released from its obligations under
this Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement and the other Loan Documents, such Lender shall cease to be a party
hereto and thereto), and such assignment shall effect a novation between
Borrowers and the Assignee.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (5) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance and receipt and acknowledgment by
Agent of such fully executed Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of Agent,
sell to one or more commercial banks, financial institutions, or other Persons
not Affiliates of such Lender (a "Participant") participating interests in its
Obligations, the Commitment, and the other rights and interests of that Lender
(the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); provided, however, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under the other Loan
Documents and the
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Originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the Originating Lender shall remain solely responsible for the performance
of such obligations, (iii) Borrowers, Agent, and the Lenders shall continue to
deal solely and directly with the Originating Lender in connection with the
Originating Lender's rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C) release all or a
material portion of the Collateral or guaranties (except to the extent expressly
provided herein or in any of the Loan Documents) supporting the Obligations
hereunder in which such Participant is participating, (D) postpone the payment
of, or reduce the amount of, the interest or fees payable to such Participant
through such Lender, or (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums, and (v) all amounts payable by
Borrowers hereunder shall be determined as if such Lender had not sold such
participation, except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no Participant
shall have any rights under this Agreement or the other Loan Documents or any
direct rights as to the other Lenders, Agent, Borrowers, the Collections, the
Collateral, or otherwise in respect of the Obligations. No Participant shall
have the right to participate directly in the making of decisions by the Lenders
among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose to a third party all
documents and information which it now or hereafter may have relating to
Borrowers or Borrowers' business.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
(h) Administrative Borrower shall maintain, or cause to be
maintained, a register (the "Register") on which it enters the name of a Lender
as the registered owner of the Term Loan held by such Lender. A Registered Loan
(and the Registered Note, if any, evidencing the same) may be assigned or sold
in whole or in part only by registration of such assignment or sale on the
Register (and each Registered Note shall expressly so provide). Any assignment
or sale of all or part of such Registered Loan (and the Registered Note, if any,
evidencing the same) may be effected only by registration of such assignment or
sale on the Register, together with the surrender of the Registered Note, if
any, evidencing the same duly
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endorsed by (or accompanied by a written instrument of assignment or sale duly
executed by) the holder of such Registered Note, whereupon, at the request of
the designated assignee(s) or transferee(s), one or more new Registered Notes in
the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the registration of assignment or sale of
any Registered Loan (and the Registered Note, if any, evidencing the same),
Administrative Borrower shall treat the Person in whose name such Registered
Loan (and the Registered Note, if any, evidencing the same) is registered as the
owner thereof for the purpose of receiving all payments thereon and for all
other purposes, notwithstanding notice to the contrary. In the case of an
assignment or delegation covered by Section 14.1(a)(z), the Lender that is the
assignee shall maintain a comparable Register on behalf of Borrowers.
(i) In the event that a Lender sells participations in the
Registered Loan, such Lender shall maintain a register on which it enters the
name of all participants in the Registered Loans held by it (the "Participant
Register"). A Registered Loan (and the Registered Note, if any, evidencing the
same) may be participated in whole or in part only by registration of such
participation on the Participant Register (and each Registered Note shall
expressly so provide). Any participation of such Registered Loan (and the
Registered Note, if any, evidencing the same) may be effected only by the
registration of such participation on the Participant Register.
14.2 Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by any Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing and
signed by all of the Lenders affected thereby and Administrative Borrower (on
behalf of all Borrowers) and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,
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(c) reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required to
take any action hereunder,
(e) amend, modify or knowingly waive this Section or any provision
of the Agreement providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Sections 3.2(d)
and 16.12,
(g) change the definition of "Required Lenders" or "Pro Rata Share",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower or Guarantor from any obligation for the
payment of money other than as permitted by Section 3.2(d), or
(j) change the definition of Borrowing Base, Eligible Accounts,
Eligible Canadian Accounts, Eligible Domestic Accounts, Eligible Inventory,
Maximum Revolver Amount, Extraordinary Receipts, Seasonal Overadvance Amount,
Term Loan Amount, Triggering Event, or change Section 2.1(b), or
(k) amend any of the provisions of Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Borrowers, shall not require consent by or the agreement of Borrowers. The
rights and duties of Lenders with respect to certain voting arrangements
relative to matters requiring the approval of Lenders are subject to the
Interlender Agreement.
15.2 Replacement of Holdout Lender.
(a) If any action to be taken by the Lender Group or Agent hereunder
requires the unanimous consent, authorization, or agreement of all Lenders, and
a Lender ("Holdout Lender") fails to give its consent, authorization, or
agreement, then Agent, upon at least 5 Business Days prior irrevocable notice to
the Holdout Lender, may permanently replace the Holdout Lender with one or more
Eligible Transferees (each, a "Replacement Lender"), and the Holdout Lender
shall have no right to refuse to be replaced hereunder. Such notice to replace
the Holdout Lender shall specify an effective date for such replacement, which
date shall not be later than 15 Business Days after the date such notice is
given.
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(b) Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 14.1. Until such time as
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrowers of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy the Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 Appointment and Authorization of Agent. Each Lender hereby designates
and appoints Foothill as its representative under this Agreement and the other
Loan Documents and each Lender hereby irrevocably authorizes Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this Section 16. The
provisions of this Section 16 are solely for the benefit of Agent, and the
Lenders, and except with respect to certain rights of Borrowers pursuant to
Section 16.11(e), Borrowers shall have no rights as a third party beneficiary of
any of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert
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under or pursuant to this Agreement and the other Loan Documents. Without
limiting the generality of the foregoing, or of any other provision of the Loan
Documents that provides rights or powers to Agent, Lenders agree that Agent
shall have the right to exercise the following powers as long as this Agreement
remains in effect: (a) maintain, in accordance with its customary business
practices, ledgers and records reflecting the status of the Obligations, the
Collateral, the Collections, and related matters, (b) execute or file any and
all financing or similar statements or notices, amendments, renewals,
supplements, documents, instruments, proofs of claim, notices and other written
agreements with respect to the Loan Documents, (c) make Advances, for itself or
on behalf of Lenders as provided in the Loan Documents, (d) exclusively receive,
apply, and distribute the Collections as provided in the Loan Documents, (e)
open and maintain such bank accounts and cash management arrangements as Agent
deems necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections, (f)
perform, exercise, and enforce any and all other rights and remedies of the
Lender Group with respect to Borrowers, the Obligations, the Collateral, the
Collections, or otherwise related to any of same as provided in the Loan
Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.
16.2 Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrowers or the books or
records or properties of any of Borrowers' Subsidiaries or Affiliates.
16.4 Reliance by Agent. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other
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Loan Document unless Agent shall first receive such advice or concurrence of the
Lenders as it deems appropriate and until such instructions are received, Agent
shall act, or refrain from acting, as it deems advisable. If Agent so requests,
it shall first be indemnified to its reasonable satisfaction by Lenders against
any and all liability and expense that may be incurred by it by reason of taking
or continuing to take any such action. Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Lenders and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
16.5 Notice of Default or Event of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a "notice of default." Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 16.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
16.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrowers and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
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16.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, reasonable attorneys fees
and expenses, costs of collection by outside collection agencies and auctioneer
fees and costs of security guards or insurance premiums paid to maintain the
Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders
for such expenses pursuant to the Loan Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from Collections
received by Agent to reimburse Agent for such out-of-pocket costs and expenses
prior to the distribution of any amounts to Lenders. In the event Agent is not
reimbursed for such costs and expenses from Collections received by Agent, each
Lender hereby agrees that it is and shall be obligated to pay to or reimburse
Agent for the amount of such Lender's Pro Rata Share thereof. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of Borrowers and without limiting the obligation of Borrowers to do so),
according to their Pro Rata Shares, from and against any and all Indemnified
Liabilities; provided, however, that no Lender shall be liable for the payment
to any Agent-Related Person of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or willful misconduct nor
shall any Lender be liable for the obligations of any Defaulting Lender in
failing to make an Advance or other extension of credit hereunder. Without
limitation of the foregoing, each Lender shall reimburse Agent upon demand for
such Lender's ratable share of any costs or out-of-pocket expenses (including
attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN ANY WAY OR TO ANY EXTENT IN WHOLE OR
IN PART CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON OR UNDER ANY CLAIM OR THEORY OF STRICT
LIABILITY.
16.8 Agent in Individual Capacity. Foothill and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrowers and their
Subsidiaries and Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents as though Foothill were not Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information regarding
Borrowers or their Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrowers or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such
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information to them. The terms "Lender" and "Lenders" include Foothill in its
individual capacity.
16.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10 Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of Agent.
16.11 Withholding Taxes.
(a) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and
Administrative Borrower:
(a) if such Lender claims an exemption from withholding tax pursuant
to its portfolio interest exception, (a) a statement of the Lender, signed under
penalty of perjury, that it
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is not a (I) a "bank" as described in Section 881(c)(3)(A) of the IRC, (II) a
10% shareholder (within the meaning of Section 881(c)(3)(B) of the IRC), or
(III) a controlled foreign corporation described in Section 881(c)(3)(C) of the
IRC, and (B) a properly completed IRS Form W-8BEN, before the first payment of
any interest under this Agreement and at any other time reasonably requested by
Agent or Administrative Borrower;
(b) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS Form
W-8BEN before the first payment of any interest under this Agreement and at any
other time reasonably requested by Agent or Administrative Borrower;
(c) if such Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively connected
with a United States trade or business of such Lender, two properly completed
and executed copies of IRS Form W-8ECI before the first payment of any interest
is due under this Agreement and at any other time reasonably requested by Agent
or Administrative Borrower;
(d) such other form or forms as may be required under the IRC or
other laws of the United States as a condition to exemption from, or reduction
of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrowers to such Lender, such
Lender agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrowers to such Lender. To the extent
of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by Section 16.11(a)
are not delivered to Agent, then Agent may withhold from any interest payment to
such Lender not providing such forms or other documentation an amount equivalent
to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders
102
under this subsection shall survive the payment of all Obligations and the
resignation or replacement of Agent.
(e) All payments made by Borrowers hereunder or under any note or
other Loan Document will be made without setoff, counterclaim, or other defense,
except as required by applicable law other than for Taxes (as defined below).
All such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of a Lender, or (ii) to the extent
that such tax results from a change in the circumstances of the Lender,
including a change in the residence, place of organization, or principal place
of business of the Lender, or a change in the branch or lending office of the
Lender participating in the transactions set forth herein) and all interest,
penalties or similar liabilities with respect thereto (all such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges being
referred to collectively as "Taxes"). If any Taxes are so levied or imposed,
each Borrower agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement or under any note, including any amount paid pursuant to this Section
16.11(e) after withholding or deduction for or on account of any Taxes, will not
be less than the amount provided for herein; provided, however, that Borrowers
shall not be required to increase any such amounts payable to Agent or any
Lender (i) that is not organized under the laws of the United States, if such
Person fails to comply with the other requirements of this Section 16.11, or
(ii) if the increase in such amount payable results from Agent's or such
Lender's own willful misconduct or gross negligence. Borrowers will furnish to
Agent as promptly as possible after the date the payment of any Taxes is due
pursuant to applicable law certified copies of tax receipts evidencing such
payment by Borrowers.
16.12 Collateral Matters.
(a) The Lenders hereby irrevocably authorize Agent, at its option
and in its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrowers
of all Obligations, (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if Administrative
Borrower certifies to Agent that the sale or disposition is permitted under
Section 7.4 of this Agreement or the other Loan Documents (and Agent may rely
conclusively on any such certificate, without further inquiry), (iii)
constituting property in which no Borrower owned any interest at the time the
security interest was granted or at any time thereafter, or (iv) constituting
property leased to a Borrower under a lease that has expired or is terminated in
a transaction permitted under this Agreement. Except as provided above, Agent
will not execute and deliver a release of any Lien on any Collateral without the
prior written authorization of (y) if the release is of all or any substantial
portion of the Collateral (whether in one or a series of transactions), all of
the Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or
Administrative Borrower at any time, the Lenders will confirm in writing Agent's
authority to release any such Liens on particular types or items of Collateral
pursuant to this Section 16.12; provided, however, that (1) Agent shall not be
required
103
to execute any document necessary to evidence such release on terms that, in
Agent's opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Borrowers in respect of) all
interests retained by Borrowers, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the Lenders
to assure that the Collateral exists or is owned by Borrowers or is cared for,
protected, or insured or has been encumbered, or that the Agent's Liens have
been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing, except as otherwise provided herein.
16.13 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrowers or any deposit accounts of
Borrowers now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by
Agent, take or cause to be taken any action, including, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral the purpose of which is, or
could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (2) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion
104
of the purchase price paid therefor shall be returned to such purchasing party,
but without interest except to the extent that such purchasing party is required
to pay interest in connection with the recovery of the excess payment.
16.14 Agency for Perfection. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets that, in accordance with Article 9 of the
Code can be perfected only by possession or control. Should any Lender obtain
possession or control of any such Collateral, such Lender shall notify Agent
thereof, and, promptly upon Agent's request therefor shall deliver possession or
control of such Collateral to Agent or in accordance with Agent's instructions.
16.15 Payments by Agent to the Lenders. All payments to be made by Agent
to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 Concerning the Collateral and Related Loan Documents. Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers
by Lenders; Other Reports and Information. By becoming a party to 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 (each a "Report" and collectively, "Reports") prepared by Agent, and
Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make
any representation or warranty as to the accuracy of any Report, and (ii) 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
Borrowers and will rely significantly upon the Books, as well as on
representations of Borrowers' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner;
it being understood and agreed by Borrowers that in any event such Lender may
make disclosures (a) to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any bona fide
105
potential or actual Assignee or Participant in connection with any contemplated
or actual assignment or transfer by such Lender of an interest herein or any
participation interest in such Lender's rights hereunder, (c) of information
that has become public by disclosures made by Persons other than such Lender,
its Affiliates, assignees, transferees, or Participants, or (d) as required or
requested by any court, governmental or administrative agency, pursuant to any
subpoena or other legal process, or by any law, statute, regulation, or court
order; provided, however, that, unless prohibited by applicable law, statute,
regulation, or court order, such Lender shall notify Administrative Borrower of
any request by any court, governmental or administrative agency, or pursuant to
any subpoena or other legal process for disclosure of any such non-public
material information concurrent with, or where practicable, prior to the
disclosure thereof, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any such
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or conclusion the indemnifying Lender may reach or draw from any Report
in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrowers, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of Borrowers, and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
shall promptly provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from Borrowers, any Lender may, from time to
time, reasonably request Agent to exercise such right as specified in such
Lender's notice to Agent, whereupon Agent promptly shall request of
Administrative Borrower the additional reports or information reasonably
specified by such Lender, and, upon receipt thereof from Administrative
Borrower, Agent promptly shall provide a copy of same to such Lender, and (z)
any time that Agent renders to Administrative Borrower a statement regarding the
Loan Account, Agent shall send a copy of such statement to each Lender.
16.18 Several Obligations; No Liability. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the
106
extent any such notice may be required, and no Lender shall have any obligation,
duty, or liability to any Participant of any other Lender. Except as provided in
Section 16.7, no member of the Lender Group shall have any liability for the
acts of any other member of the Lender Group. No Lender shall be responsible to
any Borrower or any other Person for any failure by any other Lender to fulfill
its obligations to make credit available hereunder, nor to advance for it or on
its behalf in connection with its Commitment, nor to take any other action on
its behalf hereunder or in connection with the financing contemplated herein.
17. GENERAL PROVISIONS.
17.1 Effectiveness. This Agreement shall be binding and deemed effective
when executed and delivered by Borrowers, Agent, and each Lender whose signature
is provided for on the signature pages hereof.
17.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
17.3 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or Borrowers,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 Amendments in Writing. This Agreement only can be amended by a
writing in accordance with Section 15.1.
17.6 Counterparts; Telefacsimile Execution. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by any Borrower or Guarantor or the transfer to the
Lender Group of any property should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if the Lender
Group is required to
107
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that the Lender Group is required or elects to
repay or restore, and as to all reasonable costs, expenses, and attorneys fees
of the Lender Group related thereto, the liability of Borrowers or Guarantor
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
17.8 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.9 Easy Gardener as Agent for Borrowers Each Borrower hereby irrevocably
appoints Easy Gardener as the borrowing agent and attorney-in-fact for all
Borrowers (the "Administrative Borrower") which appointment shall remain in full
force and effect unless and until Agent shall have received prior written notice
signed by each Borrower that such appointment has been revoked and that another
Borrower has been appointed Administrative Borrower. Each Borrower hereby
irrevocably appoints and authorizes the Administrative Borrower (i) to provide
Agent with all notices with respect to Advances and Letters of Credit obtained
for the benefit of any Borrower and all other notices and instructions under
this Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated group. To
induce the Lender Group to do so, and in consideration thereof, each Borrower
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 17.9 with respect to any liability that has been finally determined
by a court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of such Agent-Related Person or Lender-Related
Person, as the case may be.
17.10 Confidentiality. The Agent and the Lenders each individually agree
that material, non-public information regarding Parent and its Subsidiaries,
their operations, assets, and existing and contemplated business plans shall be
treated by them in a confidential manner, and shall not be disclosed by it to
Persons who are not parties to this Agreement, except: (a) to
108
counsel for and other advisors, accountants, and auditors to any member of the
Lender Group, (b) to its Subsidiaries and Affiliates (including the Bank Product
Providers), provided that any such Subsidiary or Affiliate shall have agreed to
receive such information hereunder subject to the terms hereof, (c) as may be
required by statute, decision, or judicial or administrative order, rule, or
regulation, (d) as may be agreed to in advance by Parent or its Subsidiaries,
(e) as to any such information that is or becomes generally available to the
public (other than as a result of prohibited disclosure by the Lender Group),
and (f) in connection with any assignment, prospective assignment, sale,
prospective sale, participation or prospective participations, or pledge or
prospective pledge of any Lender's interest under this Agreement, provided that
any such assignee, prospective assignee, purchaser, prospective purchaser,
participant, prospective participant, pledgee, or prospective pledgee shall have
agreed in writing to receive such information hereunder subject to the terms
hereof. The provisions of this Section 17.10 shall survive for 1 year after the
full and final repayment of the Obligations.
[Signature page to follow.]
109
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
U.S. HOME & GARDEN INC.
a Delaware corporation
By: /s/ Xxxxxxx Xxxx
---------------------------------------
Title: Chief Financial Officer
EASY GARDENER, INC.
a Delaware corporation
By: /s/ Xxxxxxx Xxxx
---------------------------------------
Title: Chief Financial Officer
AMPRO INDUSTRIES, INC.
a Michigan corporation
By: /s/ Xxxxxxx Xxxx
--------------------------------------
Title: Chief Financial Officer
XXXXXXXXX CONSUMER PRODUCTS GROUP, INC.
a Delaware corporation
By: /s/ Xxxxxxx Xxxx
---------------------------------------
Title: Chief Financial Officer
XXXXXXXXX CONSUMER PRODUCTS, INC.
a Delaware corporation
By: /s/ Xxxxxxx Xxxx
---------------------------------------
Title: Chief Financial Officer
110
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as a Lender
By: /s/ Xxx Xxxx
----------------------------------------
Title: Senior Underwriting Officer
ABLECO FINANCE LLC,
a Delaware limited liability company
By:
----------------------------------------
Title:
111
TABLE OF CONTENTS
Page
1.
DEFINITIONS AND CONSTRUCTION
1.1 Definitions ......................................................... 1
1.2 Accounting Terms .................................................... 29
1.3 Code ................................................................ 30
1.4 Construction ........................................................ 30
1.5 Schedules and Exhibits .............................................. 30
2.
LOAN AND TERMS OF PAYMENT
2.1 Revolver Advances ................................................... 30
2.2 Term Loan ........................................................... 32
2.3 Borrowing Procedures and Settlements ................................ 32
2.4 Payments ............................................................ 39
2.5 Overadvances ........................................................ 45
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments,
and Calculations .................................................... 45
2.7 Cash Management ..................................................... 48
2.8 Crediting Payments; Float Charge .................................... 49
2.9 Designated Account .................................................. 50
2.10 Maintenance of Loan Account; Statements of Obligations .............. 50
2.11 Fees ................................................................ 50
2.12 Letters of Credit ................................................... 51
2.13 LIBOR Option ........................................................ 54
2.14 Capital Requirements ................................................ 56
2.15 Joint and Several Liability of Borrowers ............................ 57
2.16 Registered Notes .................................................... 59
2.17 Securitization ...................................................... 60
3.
CONDITIONS; TERM OF AGREEMENT
3.1 Conditions Precedent to the Initial Extension of Credit.............. 60
3.2 Conditions Subsequent to the Initial Extension of Credit............. 64
3.3 Conditions Precedent to all Extensions of Credit..................... 64
3.4 Term................................................................. 65
3.5 Effect of Termination................................................ 65
3.6 Early Termination by Borrowers....................................... 65
4.
CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest........................................... 66
4.2 Negotiable Collateral................................................ 66
4.3 Collection of Accounts, General Intangibles, and
Negotiable Collateral................................................ 67
4.4 Delivery of Additional Documentation Required........................ 67
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TABLE OF CONTENTS
(continued)
Page
4.5 Power of Attorney.................................................... 67
4.6 Right to Inspect..................................................... 68
4.7 Control Agreements................................................... 68
5.
REPRESENTATIONS AND WARRANTIES
5.1 No Encumbrances...................................................... 68
5.2 Eligible Accounts.................................................... 68
5.3 Eligible Inventory................................................... 69
5.4 Equipment............................................................ 69
5.5 Location of Inventory and Equipment.................................. 69
5.6 Inventory Records.................................................... 69
5.7 Location of Chief Executive Office; FEIN............................. 69
5.8 Due Organization and Qualification; Subsidiaries..................... 69
5.9 Due Authorization; No Conflict....................................... 70
5.10 Litigation........................................................... 71
5.11 No Material Adverse Change........................................... 71
5.12 Fraudulent Transfer.................................................. 71
5.13 Employee Benefits.................................................... 71
5.14 Environmental Condition.............................................. 71
5.15 Brokerage Fees....................................................... 72
5.16 Intellectual Property................................................ 72
5.17 Leases............................................................... 72
5.18 DDAs................................................................. 72
5.19 Complete Disclosure.................................................. 72
5.20 Indebtedness......................................................... 72
6.
AFFIRMATIVE COVENANTS
6.1 Accounting System.................................................... 73
6.2 Collateral Reporting................................................. 73
6.3 Financial Statements, Reports, Certificates.......................... 74
6.4 Guarantor Reports.................................................... 76
6.5 Return............................................................... 76
6.6 Maintenance of Properties............................................ 76
6.7 Taxes................................................................ 76
6.8 Insurance............................................................ 77
6.9 Location of Inventory and Equipment.................................. 77
6.10 Compliance with Laws................................................. 78
6.11 Leases............................................................... 78
6.12 Brokerage Commissions................................................ 78
6.13 Existence............................................................ 78
6.14 Environmental........................................................ 78
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TABLE OF CONTENTS
(continued)
Page
6.15 Disclosure Updates................................................... 78
7.
NEGATIVE COVENANTS
7.1 Indebtedness......................................................... 79
7.2 Liens................................................................ 79
7.3 Restrictions on Fundamental Changes.................................. 80
7.4 Disposal of Assets................................................... 80
7.5 Change Name.......................................................... 81
7.6 Guarantee............................................................ 81
7.7 Nature of Business................................................... 81
7.8 Prepayments and Amendments........................................... 81
7.9 Change of Control.................................................... 81
7.10 Consignments......................................................... 81
7.11 Distributions........................................................ 81
7.12 Accounting Methods................................................... 82
7.13 Investments.......................................................... 82
7.14 Transactions with Affiliates......................................... 82
7.15 Suspension........................................................... 82
7.16 Compensation......................................................... 82
7.17 Use of Proceeds...................................................... 82
7.18 Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees............................................... 82
7.19 Securities Accounts.................................................. 83
7.20 Financial Covenants.................................................. 83
8.
EVENTS OF DEFAULT
9.
THE LENDER GROUP'S RIGHTS AND REMEDIES
9.1 Rights and Remedies.................................................. 86
9.2 Remedies Cumulative.................................................. 88
10.
TAXES AND EXPENSES
11.
WAIVERS; INDEMNIFICATION
11.1 Demand; Protest; etc................................................. 89
11.2 The Lender Group's Liability for Collateral.......................... 89
11.3 Indemnification...................................................... 89
12.
NOTICES
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TABLE OF CONTENTS
(continued)
Page
13.
CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
14.
ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS
14.1 Assignments and Participations....................................... 92
14.2 Successors........................................................... 95
15.
AMENDMENTS; WAIVERS
15.1 Amendments and Waivers............................................... 95
15.2 Replacement of Holdout Lender........................................ 96
15.3 No Waivers; Cumulative Remedies...................................... 96
16.
AGENT; THE LENDER GROUP
16.1 Appointment and Authorization of Agent............................... 97
16.2 Delegation of Duties................................................. 98
16.3 Liability of Agent................................................... 98
16.4 Reliance by Agent.................................................... 98
16.5 Notice of Default or Event of Default................................ 98
16.6 Credit Decision...................................................... 99
16.7 Costs and Expenses; Indemnification.................................. 99
16.8 Agent in Individual Capacity......................................... 100
16.9 Successor Agent...................................................... 100
16.10 Lender in Individual Capacity........................................ 101
16.11 Withholding Taxes.................................................... 101
16.12 Collateral Matters................................................... 103
16.13 Restrictions on Actions by Lenders; Sharing of Payments.............. 104
16.14 Agency for Perfection................................................ 104
16.15 Payments by Agent to the Lenders..................................... 104
16.16 Concerning the Collateral and Related Loan Documents................. 105
16.17 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information .............. 105
16.18 Several Obligations; No Liability.................................... 106
17.
GENERAL PROVISIONS
17.1 Effectiveness........................................................ 107
17.2 Section Headings..................................................... 107
17.3 Interpretation....................................................... 107
17.4 Severability of Provisions........................................... 107
17.5 Amendments in Writing................................................ 107
17.6 Counterparts; Telefacsimile Execution................................ 107
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TABLE OF CONTENTS
(continued)
Page
17.7 Revival and Reinstatement of Obligations............................. 107
17.8 Integration.......................................................... 108
17.9 Easy Gardener as Agent for Borrowers................................. 108
17.10 Confidentiality...................................................... 108
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule E-1 Eligible Inventory Locations
Schedule P-1 Permitted Investments
Schedule P-2 Permitted Liens
Schedule 2.7(a) Cash Management Banks
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrowers
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.15 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 7.6 Permitted Guarantees
Schedule 7.18 Permitted Locations
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Schedule A-1
Agent's Account
An account at a bank designated by Agent from time to time as the account
into which Administrative Borrower shall make all payments to Agent for the
benefit of the Lender Group and into which the Lender Group shall make all
payments to Agent under this Agreement and the other Loan Documents; unless and
until Agent notifies Administrative Borrower and the Lender Group to the
contrary, Agent's Account shall be that certain deposit account bearing account
number 323-266193 and maintained by Agent with JPMorgan Chase Bank, 0 Xxx Xxxx
Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, ABA #000000000.
Schedule C-1
------------
Commitments
================================================================================
Lender Revolver Commitment Term Loan Commitment Total Commitment
================================================================================
Foothill Capital $23,000,000 $0.00 $23,000,000
Corporation
================================================================================
Ableco Finance LLC $0.00 $12,000,000 $12,000,000
================================================================================
All Lenders $23,000,000 $12,000,000 $35,000,000
================================================================================
Schedule D-1
Designated Account
Account number _________ of Administrative Borrower maintained with
Administrative Borrower Designated Account Bank, or such other deposit account
of Administrative Borrower (located within the United States) that has been
designed as such, in writing, by Administrative Borrower to Agent.
"Designated Account Bank" means ____________, whose office is located
at _________, and whose ABA number is _____________.
