CREDIT AGREEMENT
Dated as of January 6, 1999
among
ZOMAX OPTICAL MEDIA, INC.,
as Borrower,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
TABLE OF CONTENTS
Page
1. AMOUNT AND TERMS OF CREDIT.................................................1
1.1. Credit Facilities...............................................1
1.2. Letters of Credit...............................................5
1.3. Prepayments.....................................................5
1.4. Use of Proceeds.................................................7
1.5. Interest and Applicable Margins.................................7
1.6. Eligible Accounts...............................................9
1.7. Eligible Inventory.............................................12
1.8. Cash Management Systems........................................13
1.9. Fees...........................................................13
1.10. Receipt of Payments...........................................14
1.11. Application and Allocation of Payments........................14
1.12. Loan Account and Accounting...................................15
1.13. Indemnity.....................................................16
1.14. Access........................................................17
1.15. Taxes.........................................................18
1.16. Capital Adequacy; Increased Costs; Illegality.................18
1.17. Single Loan...................................................20
2. CONDITIONS PRECEDENT......................................................20
2.1. Conditions to the Initial Loans................................20
2.2. Further Conditions to Each Loan................................22
3. REPRESENTATIONS AND WARRANTIES............................................23
3.1. Corporate Existence; Compliance with Law.......................23
3.2. Executive Offices; FEIN........................................23
3.3. Corporate Power, Authorization, Enforceable Obligations........23
3.4. Financial Statements and Projections...........................24
3.5. Material Adverse Effect........................................25
3.6. Ownership of Property; Liens...................................25
3.7. Labor Matters..................................................26
3.8. Ventures, Subsidiaries and Affiliates; Outstanding Stock
and Indebtedness...............................................27
3.9. Government Regulation..........................................27
3.10. Margin Regulations............................................27
3.11. Taxes.........................................................27
3.12. ERISA.........................................................28
3.13. No Litigation.................................................29
3.14. Brokers.......................................................29
3.15. Intellectual Property.........................................29
3.16. Full Disclosure...............................................29
3.17. Environmental Matters.........................................30
3.18. Insurance.....................................................30
3.19. Deposit and Disbursement Accounts.............................31
3.20. Government Contracts..........................................31
3.21. Customer and Trade Relations..................................31
3.22. Agreements and Other Documents................................31
3.23. Solvency......................................................31
3.24. Year 2000 Representations.....................................32
3.25. Acquisition Agreements........................................32
4. FINANCIAL STATEMENTS AND INFORMATION......................................32
4.1. Reports and Notices............................................32
4.2. Communication with Accountants.................................33
5. AFFIRMATIVE COVENANTS.....................................................33
5.1. Maintenance of Existence and Conduct of Business...............33
5.2. Payment of Obligations.........................................33
5.3. Books and Records..............................................34
5.4. Insurance; Damage to or Destruction of Collateral..............34
5.5. Compliance with Laws...........................................36
5.6. Supplemental Disclosure........................................36
5.7. Intellectual Property..........................................36
5.8. Environmental Matters..........................................36
5.9. Landlords' Agreements, Mortgagee Agreements and Bailee Letters.37
5.10. Further Assurances............................................38
5.11. Year 2000 Problems............................................38
5.12. Post-Closing Matters..........................................38
6. NEGATIVE COVENANTS........................................................38
6.1. Mergers, Subsidiaries, Etc.....................................38
6.2. Investments; Loans and Advances................................41
6.3. Indebtedness...................................................42
6.4. Employee Loans and Affiliate Transactions......................43
6.5. Capital Structure and Business.................................44
6.6. Guaranteed Indebtedness........................................44
6.7. Liens..........................................................44
6.8. Sale of Stock and Assets.......................................45
6.9. ERISA..........................................................45
6.10. Financial Covenants...........................................45
6.11. Hazardous Materials...........................................45
6.12. Sale-Leasebacks...............................................46
6.13. Cancellation of Indebtedness..................................46
6.14. Restricted Payments...........................................46
6.15. Change of Corporate Name or Location; Change of Fiscal Year...46
6.16. No Impairment of Intercompany Transfers.......................46
6.17. No Speculative Transactions...................................47
6.18. Leases........................................................47
7. TERM......................................................................47
7.1. Termination....................................................47
7.2. Survival of Obligations Upon Termination of Financing
Arrangements...................................................47
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES....................................48
8.1. Events of Default..............................................48
8.2. Remedies.......................................................50
8.3. Waivers by Borrower............................................50
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT.......................51
9.1. Assignment and Participations..................................51
9.2. Appointment of Agent...........................................53
9.3. Agent's Reliance, Etc..........................................53
9.4. GE Capital and Affiliates......................................54
9.5. Lender Credit Decision.........................................54
9.6. Indemnification................................................55
9.7. Successor Agent................................................55
9.8. Setoff and Sharing of Payments.................................56
9.9. Advances; Payments; Non-Funding Lenders; Information;
Actions in Concert.............................................57
10. SUCCESSORS AND ASSIGNS...................................................59
10.1. Successors and Assigns........................................59
11. MISCELLANEOUS............................................................59
11.1. Complete Agreement; Modification of Agreement.................59
11.2. Amendments and Waivers........................................60
11.3. Fees and Expenses.............................................62
11.4. No Waiver.....................................................63
11.5. Remedies......................................................63
11.6. Severability..................................................64
11.7. Conflict of Terms.............................................64
11.8. Confidentiality...............................................64
11.9. GOVERNING LAW.................................................64
11.10. Notices......................................................65
11.11. Section Titles...............................................66
11.12. Counterparts.................................................66
11.13. WAIVER OF JURY TRIAL.........................................66
11.14. Press Releases...............................................67
11.15. Reinstatement................................................67
11.16. Advice of Counsel............................................67
11.17. No Strict Construction.......................................67
INDEX OF APPENDICES
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b) - Form of Term Note
Exhibit 1.1(c)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule 1.1 - Responsible Individual
Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Schedule 3.2 - Executive Offices; FEIN
Schedule 3.4(A) - Financial Statements
Schedule 3.4(B) - Xxxxxx Xxxxxxxx Report re KAO Infosystems Company
Schedule 3.4(C) - Pro Forma
Schedule 3.4(D) - Projections
Schedule 3.4(E) - Fair Salable Balance Sheet
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Material Agreements
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.7 - Existing Liens
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Schedule of Additional Closing Documents
Annex E (Section 4.1(a)) - Financial Statements and Projections - Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice AddressesAnnex J (from Annex A-
Commitments definition) - Commitments as of Closing Date
CREDIT AGREEMENT, dated as of January 6, 1999 among ZOMAX
OPTICAL MEDIA, INC., a Minnesota corporation ("Borrower"); GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation (in its individual capacity, "GE
Capital"), for itself, as Lender, and as Agent for Lenders; and the other
Lenders signatory hereto from time to time.
RECITALS
WHEREAS, Borrower desires that Lenders extend revolving and
term credit facilities to Borrower of up to Thirty-Two Million Five Hundred
Thousand Dollars ($32,500,000) in the aggregate for the purpose of funding a
portion of the Acquisition and refinancing certain indebtedness of Borrower and
to provide (a) working capital financing for Borrower, and (b) funds for other
general corporate purposes of Borrower; and for these purposes, Lenders are
willing to make certain loans and other extensions of credit to Borrower of up
to such amount upon the terms and conditions set forth herein; and
WHEREAS, Borrower desires to secure all of its obligations
under the Loan Documents by granting to Agent, for the benefit of Agent and
Lenders, a security interest in and lien upon all of its existing and
after-acquired personal and real property; and
WHEREAS, capitalized terms used in this Agreement shall have
the meanings ascribed to them in Annex A. All Annexes, Disclosure Schedules,
Exhibits and other attachments (collectively, "Appendices") hereto, or expressly
identified to this Agreement, are incorporated herein by reference, and taken
together, shall constitute but a single agreement. These Recitals shall be
construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, and for other good and valuable
consideration, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1. Credit Facilities.
(a) Revolving Credit Facility.
(i) Subject to the terms and conditions hereof, each Revolving Lender
agrees to make available from time to time until the Commitment
Termination Date its Pro Rata Share of advances (each, a "Revolving
Credit Advance"). The Pro Rata Share of the Revolving Loan of any
Revolving Lender shall not at any time exceed its separate Revolving
Loan Commitment. The obligations of each Revolving Lender hereunder
shall be several and not joint. The aggregate amount of Revolving
Credit Advances outstanding shall not exceed at any time the lesser of
(A) the Maximum Amount and (B) the Borrowing Base, in each case less
the sum of the Letter of Credit Obligations and the Swing Line Loan
outstanding at such time ("Borrowing Availability"). Until the
Commitment Termination Date, Borrower may from time to time borrow,
repay and reborrow under this Section 1.1(a). Each Revolving Credit
Advance shall be made on notice by Borrower to the representative of
Agent identified on Schedule 1.1 at the address specified thereon.
Those notices must be given no later than (1) 11:00 a.m. (Chicago time)
on the Business Day of the proposed Revolving Credit Advance, in the
case of an Index Rate Loan, or (2) 11:00 a.m. (Chicago time) on the
date which is three (3) Business Days prior to the proposed Revolving
Credit Advance, in the case of a LIBOR Loan. Each such notice (a
"Notice of Revolving Credit Advance") must be given in writing (by
telecopy or overnight courier) substantially in the form of Exhibit
1.1(a)(i), and shall include the information required in such Exhibit
and such other information as may be required by Agent. If Borrower
desires to have the Revolving Credit Advances bear interest by
reference to a LIBOR Rate, it must comply with Section 1.5(e).
(ii) Borrower shall execute and deliver to each Revolving Lender a note to
evidence the Revolving Loan Commitment of that Revolving Lender. Each
note shall be in the principal amount of the Revolving Loan Commitment
of the applicable Revolving Lender, dated the Closing Date and
substantially in the form of Exhibit 1.1(a)(ii) (each a "Revolving
Note" and, collectively, the "Revolving Notes"). Each Revolving Note
shall represent the obligation of Borrower to pay the amount of each
Revolving Lender's Revolving Loan Commitment or, if less, the
applicable Revolving Lender's Pro Rata Share of the aggregate unpaid
principal amount of all Revolving Credit Advances to Borrower together
with interest thereon as prescribed in Section 1.5. The entire unpaid
balance of the Revolving Loan and all other non-contingent Obligations
shall be immediately due and payable in full in immediately available
funds on the Commitment Termination Date.
(iii) At the request of Borrower, in its discretion Agent may (but shall have
absolutely no obligation to), make Revolving Credit Advances to
Borrower on behalf of Revolving Lenders in amounts which cause the
outstanding balance of the aggregate Revolving Loan to exceed the
Borrowing Base (less the Swing Line Loan) (any such excess Revolving
Credit Advances are herein referred to collectively as "Overadvances"),
and no such event or occurrence shall cause or constitute a waiver by
Agent or Lenders of any Default or Event of Default that may result
therefrom or of Agent's, the Swing Line Lender's or Revolving Lenders'
right to refuse to make any further Overadvances, Swing Line Advances
or Revolving Credit Advances, or incur any Letter of Credit
Obligations, as the case may be, at any time that an Overadvance exists
or would result therefrom. In addition, Overadvances may be made even
if the conditions to lending set forth in Section 2 have not been met.
All Overadvances shall constitute Index Rate Loans, shall bear interest
at the Default Rate and shall be payable on demand. Except as otherwise
provided in Section 1.11(b), the authority of Agent to make
Overadvances is limited to an aggregate amount not to exceed $1,000,000
at any time, shall not cause the Revolving Loan to exceed the Maximum
Amount, and may be revoked prospectively by a written notice to Agent
signed by Revolving Lenders holding fifty percent (50%) or more of the
Revolving Loan Commitments.
(b) Term Loan.
(i) Subject to the terms and conditions hereof, each Term Lender agrees to
make a term loan on the Closing Date to Borrower (the "Term Loan") in
the original principal amount of its Term Loan Commitment. The
obligations of each Term Lender hereunder shall be several and not
joint. The Term Loan shall be evidenced by promissory notes
substantially in the form of Exhibit 1.1(b) (each a "Term Note" and
collectively the "Term Notes"), and Borrower shall execute and deliver
a Term Note to each Term Lender. Each Term Note shall represent the
obligation of Borrower to pay the amount of the applicable Term
Lender's Term Loan Commitment, together with interest thereon as
prescribed in Section 1.5.
(ii) Borrower shall pay the principal amount of the Term Loan in twenty (20)
consecutive quarterly installments of $625,000 on the first day of
January, April, July and October of each year, commencing April 1,
1999.
Notwithstanding the foregoing, the aggregate outstanding
principal balance of the Term Loan shall be due and payable in full in
immediately available funds on the Commitment Termination Date, if not sooner
paid in full.
(iii) Each payment of principal with respect to the Term Loan shall be paid
to Agent for the ratable benefit of each Term Lender, ratably in
proportion to each such Term Lender's respective Term Loan Commitment.
(c) Swing Line Facility.
(i) Agent shall notify the Swing Line Lender upon Agent's receipt of any
Notice of Revolving Credit Advance. Subject to the terms and conditions
hereof, the Swing Line Lender may, in its discretion, make available
from time to time until the Commitment Termination Date advances (each,
a "Swing Line Advance") in accordance with any such notice. The
aggregate amount of Swing Line Advances outstanding shall not exceed
the lesser of (A) the Swing Line Commitment and (B) the lesser of the
Maximum Amount and (except for Overadvances) the Borrowing Base, in
each case, less the outstanding balance of the Revolving Loan at such
time ("Swing Line Availability"). Until the Commitment Termination
Date, Borrower may from time to time borrow, repay and reborrow under
this Section 1.1(c). Each Swing Line Advance shall be made pursuant to
a Notice of Revolving Credit advance delivered by Borrower to Agent in
accordance with Section 1.1(a). Those notices must be given no later
than 11:00 a.m. (Chicago time) on the Business Day of the proposed
Swing Line Advance. Unless the Swing Line Lender has received at least
one (1) Business Day's prior written notice from Agent or Requisite
Revolving Lenders instructing it not to make the Swing Line Advance,
the Swing Line Lender shall, notwithstanding the failure of any
condition precedent set forth in Section 2.2 of this Agreement (other
than the condition precedent set forth in Section 2.2(e) of this
Agreement), be entitled to fund such Swing Line Advance and, in
connection with such Swing Line Advance, to have each Revolving Lender
make Revolving Credit Advances in accordance with Section 1.1(c)(iii)
or to purchase participating interests in accordance with Section
1.1(c)(iv). Notwithstanding any other provision of this Agreement or
the other Loan Documents, the Swing Line Loan shall constitute an Index
Rate Loan. Borrower shall repay the aggregate outstanding principal
amount of the Swing Line Loan upon demand therefor by Agent.
(ii) Borrower shall execute and deliver to the Swing Line Lender a
promissory note to evidence the Swing Line Commitment. Such note shall
be in the principal amount of the Swing Line Commitment of the Swing
Line Lender, dated the Closing Date and substantially in the form of
Exhibit 1.1(c)(ii) (the "Swing Line Note"). The Swing Line Note shall
represent the obligation of Borrower to pay the amount of the Swing
Line Commitment or, if less, the aggregate unpaid principal amount of
all Swing Line Advances made to Borrower together with interest thereon
as prescribed in Section 1.5. The entire unpaid balance of the Swing
Line Loan and all other non-contingent Obligations shall be immediately
due and payable in full in immediately available funds on the
Commitment Termination Date if not sooner paid in full.
(iii) Refunding of Swing Line Loans. The Swing Line Lender, at any time and
from time to time in its sole and absolute discretion but no less
frequently than once weekly, may on behalf of Borrower (and Borrower
hereby irrevocably authorizes the Swing Line Lender to so act on its
behalf) request each Revolving Lender (including the Swing Line Lender)
to make a Revolving Credit Advance to Borrower (which shall be an Index
Rate Loan) in an amount equal to such Revolving Lender's Pro Rata Share
of the principal amount of the Swing Line Loan (the "Refunded Swing
Line Loan") outstanding on the date such notice is given. Unless any of
the events described in Sections 8.1(h) or 8.1(i) shall have occurred
(in which event the procedures of Section 1.1(c)(iv) shall apply) and
regardless of whether the conditions precedent set forth in this
Agreement to the making of a Revolving Credit Advance are then
satisfied, each Revolving Lender shall disburse directly to Agent, its
Pro Rata Share of a Revolving Credit Advance on behalf of the Swing
Line Lender, prior to 2:00 p.m. (Chicago time), in immediately
available funds on the Business Day next succeeding the date such
notice is given. The proceeds of such Revolving Credit Advances shall
be immediately paid to the Swing Line Lender and applied to repay the
Refunded Swing Line Loan.
(iv) Participation in Swing Line Loans. If, prior to refunding a Swing Line
Loan with a Revolving Credit Advance pursuant to Section 1.1(c)(iii),
one of the events described in Sections 8.1(h) or 8.1(i) shall have
occurred, then, subject to the provisions of Section 1.1(c)(v) below,
each Revolving Lender will, on the date such Revolving Credit Advance
was to have been made for the benefit of Borrower, purchase from the
Swing Line Lender an undivided participation interest in the Swing Line
Loan in an amount equal to its Pro Rata Share of such Swing Line Loan.
Upon request, each Revolving Lender will promptly transfer to the Swing
Line Lender, in immediately available funds, the amount of its
participation.
(v) Revolving Lenders' Obligations Unconditional. Each Revolving Lender's
obligation to make Revolving Credit Advances in accordance with Section
1.1(c)(iii) and to purchase participating interests in accordance with
Section 1.1(c)(iv) shall be absolute and unconditional and shall not be
affected by any circumstance, including (A) any setoff, counterclaim,
recoupment, defense or other right which such Revolving Lender may have
against the Swing Line Lender, Borrower or any other Person for any
reason whatsoever; (B) the occurrence or continuance of any Default or
Event of Default; (C) any inability of Borrower to satisfy the
conditions precedent to borrowing set forth in this Agreement on the
date upon which such participating interest is to be purchased or (D)
any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing. If any Revolving Lender does not make
available to Agent or the Swing Line Lender, as applicable, the amount
required pursuant to Section 1.1(c)(iii) or 1.1(c)(iv), as the case may
be, the Swing Line Lender shall be entitled to recover such amount on
demand from such Revolving Lender, together with interest thereon for
each day from the date of non-payment until such amount is paid in full
at the Federal Funds Rate for the first two (2) Business Days and at
the Index Rate thereafter.
(d) Reliance on Notices. Agent shall be entitled to rely upon, and shall be
fully protected in relying upon, any Notice of Revolving Credit Advance, Notice
of Conversion/Continuation or similar notice believed by Agent to be genuine.
Agent may assume that each Person executing and delivering such a notice was
duly authorized, unless the responsible individual acting thereon for Agent has
actual knowledge to the contrary.
1.2. Letters of Credit.
Subject to and in accordance with the terms and conditions
contained herein and in Annex B, Borrower shall have the right to request, and
Revolving Lenders agree to incur, or purchase participations in, Letter of
Credit Obligations in respect of Borrower.
1.3. Prepayments.
(a) Voluntary Prepayments. Borrower may at any time on at least sixty (60) days'
prior written notice to Agent voluntarily prepay all or part of the Term Loan;
provided that any such prepayments shall be in a minimum amount of $500,000 and
integral multiples of $250,000 in excess of such amount. In addition, Borrower
may at any time on at least sixty (60) days' prior written notice to Agent
terminate the Revolving Loan Commitment; provided that upon such termination,
all Loans and other Obligations shall be immediately due and payable in full.
Any such voluntary prepayment and any such termination of the Revolving Loan
Commitment must be accompanied by the payment of the fee required by Section
1.9(c), if any, plus the payment of any LIBOR funding breakage costs in
accordance with Section 1.13(b). Upon any such prepayment and termination of the
Revolving Loan Commitment, Borrower's right to request Revolving Credit
Advances, or request that Letter of Credit Obligations be incurred on its
behalf, or request Swing Line Advances, shall simultaneously be terminated. Any
partial prepayments of the Term Loan made by Borrower shall be applied to prepay
the scheduled installments of the Term Loan in inverse order of maturity.
(b) Mandatory Prepayments.
(i) If at any time the outstanding balance of the Revolving Loan exceeds
the lesser of (A) the Maximum Amount and (B) the Borrowing Base, less,
in each case, the outstanding Swing Line Loan at such time, Borrower
shall immediately repay the aggregate outstanding Revolving Credit
Advances to the extent required to eliminate such excess. If any such
excess remains after repayment in full of the aggregate outstanding
Revolving Credit Advances, Borrower shall provide cash collateral for
the Letter of Credit Obligations in the manner set forth in Annex B to
the extent required to eliminate such excess. Notwithstanding the
foregoing, any Overadvance made pursuant to Section 1.1(a)(iii) shall
be repaid only on demand.
(ii) Immediately upon receipt by Borrower of proceeds of any asset
disposition (including condemnation proceeds, but excluding proceeds of
asset dispositions permitted by Section 6.8(a)) or any sale of Stock of
any Subsidiary of Borrower, Borrower shall prepay the Loans in an
amount equal to all such proceeds, net of (A) commissions and other
reasonable and customary transaction costs, fees and expenses properly
attributable to such transaction and payable by Borrower in connection
therewith (in each case, paid to non-Affiliates), (B) transfer taxes,
(C) amounts payable to holders of senior Liens (to the extent such
Liens constitute Permitted Encumbrances hereunder), if any, and (D) an
appropriate reserve for income taxes in accordance with GAAP in
connection therewith. Any such prepayment shall be applied in
accordance with clause (c) below. Notwithstanding the foregoing, in no
event shall the proceeds of any Stock offering of Borrower be required
to be applied to the Loans.
(c) Application of Certain Mandatory Prepayments. Any prepayments made by
Borrower pursuant to clause (b)(ii) above shall be applied as follows: first, to
Fees and reimbursable expenses of Agent then due and payable pursuant to any of
the Loan Documents; second, to interest then due and payable on the Term Loan;
third, to prepay the scheduled installments of the Term Loan in inverse order of
maturity, until such Loan shall have been prepaid in full; fourth, to interest
then due and payable on the Swing Line Loan; fifth, to the principal balance of
the Swing Line Loan until the same shall have been repaid in full; sixth, to
interest then due and payable on the Revolving Credit Advances; seventh, to the
outstanding principal balance of Revolving Credit Advances consisting of Index
Rate Loans until the same shall have been paid in full; eighth, to the
outstanding principal balance of Revolving Credit Advances consisting of LIBOR
Loans until the same have been paid in full; and ninth, to any Letter of Credit
Obligations, to provide cash collateral therefor in the manner set forth in
Annex B, until all such Letter of Credit Obligations have been fully cash
collateralized in the manner set forth in Annex B. Neither the Revolving Loan
Commitment nor the Swing Line Commitment shall be permanently reduced by the
amount of any such prepayments.
(d) Application of Prepayments from Insurance Proceeds. Prepayments from
insurance proceeds in accordance with Section 5.4(c) shall be applied as
follows: insurance proceeds from casualties or losses to cash or Inventory shall
be applied first, to the Swing Line Loans; second, to the Revolving Credit
Advances consisting of Index Rate Loans; and third, to the Revolving Credit
Advances consisting of LIBOR Loans; insurance proceeds from casualties or losses
to Equipment, Fixtures and Real Estate shall be applied to scheduled
installments of the Term Loan in inverse order of maturity. Neither the
Revolving Loan Commitment nor the Swing Line Loan Commitment shall be
permanently reduced by the amount of any such prepayments. If the precise amount
of insurance proceeds allocable to Inventory as compared to Equipment, Fixtures
and Real Estate are not otherwise determined, the allocation and application of
those proceeds shall be determined by Agent, subject to the approval of
Requisite Lenders.
(e) Nothing in this Section 1.3 shall be construed to constitute Agent's or any
Lender's consent to any transaction referred to in clause (b)(ii) above which is
not permitted by other provisions of this Agreement or the other Loan Documents.
1.4. Use of Proceeds.
Borrower shall utilize the proceeds of the Term Loan, the
Revolving Loan and the Swing Line Loan solely for the Acquisition and the
Refinancing (and to pay any related transaction expenses), and for the financing
of Borrower's ordinary working capital and general corporate needs (but
excluding in any event the making of any Restricted Payment not specifically
permitted by Section 6.14). Disclosure Schedule (1.4) contains a description of
Borrower's sources and uses of funds as of the Closing Date, including Loans and
Letter of Credit Obligations to be made or incurred on that date, and a funds
flow memorandum detailing how funds from each source are to be transferred to
particular uses.
1.5. Interest and Applicable Margins.
(a) Borrower shall pay interest to Agent, for the ratable benefit of Lenders in
accordance with the various Loans being made by each Lender, in arrears on each
applicable Interest Payment Date, at the following rates: (i) with respect to
the Revolving Credit Advances, the Index Rate plus the Applicable Revolver Index
Margin per annum or, at the election of Borrower, the applicable LIBOR Rate plus
the Applicable Revolver LIBOR Margin per annum, based on the aggregate Revolving
Credit Advances outstanding from time to time; (ii) with respect to the Term
Loan, the Index Rate plus the Applicable Term Loan Index Margin per annum or, at
the election of Borrower, the applicable LIBOR Rate plus the Applicable Term
Loan LIBOR Margin per annum; and (iii) with respect to the Swing Line Loan, the
Index Rate plus the Applicable Revolver Index Margin per annum.
The Applicable Revolver Index Margin, Applicable Term Loan
Index Margin, Applicable Revolver LIBOR Margin , Applicable Term Loan LIBOR
Margin , Applicable L/C Margin and Applicable Unused Line Fee Margin will be
one-half of one percent (0.50%), three-quarters of one percent (0.75%), two
percent (2.00%), two and one-quarter percent (2.25%), two percent (2.00%) and
three-eighths of one percent (0.375%) per annum, respectively; provided, that
after the Closing Date, if GE Capital or its Affiliates in good faith determine
that GE Capital is unable to assign such portion of the Commitments as GE
Capital deems appropriate because of the foregoing Applicable Margins, Agent may
adjust the foregoing Applicable Margins to effectuate such assignment.
(b) If any payment on any Loan becomes due and payable on a day other than a
Business Day, the maturity thereof will be extended to the next succeeding
Business Day (except as set forth in the definition of LIBOR Period) and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and interest shall
be made by Agent on the basis of a three hundred and sixty (360) day year, in
each case for the actual number of days occurring in the period for which such
interest and Fees are payable. The Index Rate shall be determined each day based
upon the Index Rate as in effect each day. Each determination by Agent of an
interest rate and Fees hereunder shall be conclusive, absent manifest error.
(d) So long as an Event of Default shall have occurred and be continuing under
Section 8.1a, (h) or (i), or so long as any other Event of Default shall have
occurred and be continuing and at the election of Agent (or upon the written
request of Requisite Lenders) confirmed by written notice from Agent to
Borrower, the interest rates applicable to the Loans and the Letter of Credit
Fees shall be increased by two percent (2%) per annum above the rates of
interest or the rate of such Fees otherwise applicable hereunder ("Default
Rate"), and all outstanding Obligations shall bear interest at the Default Rate
applicable to such Obligations. Interest and Letter of Credit Fees at the
Default Rate shall accrue from the initial date of such Event of Default until
that Event of Default is cured or waived and shall be payable upon demand.
(e) So long as no Default or Event of Default shall have occurred and be
continuing, and subject to the additional conditions precedent set forth in
Section 2.2, Borrower shall have the option to (i) request that any Revolving
Credit Advances be made as a LIBOR Loan, (ii) convert at any time all or any
part of outstanding Loans (other than the Swing Line Loan) from Index Rate Loans
to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject to
payment of LIBOR breakage costs in accordance with Section 1.13(b) if such
conversion is made prior to the expiration of the LIBOR Period applicable
thereto, or (iv) continue all or any portion of any Loan (other than the Swing
Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR Period
and the succeeding LIBOR Period of that continued Loan shall commence on the
last day of the LIBOR Period of the Loan to be continued. Any Loan to be made or
continued as, or converted into, a LIBOR Loan must be in a minimum amount of
$1,000,000 and integral multiples of $500,000 in excess of such amount. Any such
election must be made by 11:00 a.m. (Chicago time) on the third (3rd) Business
Day prior to (1) the date of any proposed Advance which is to bear interest at
the LIBOR Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans
to be continued as such, or (3) the date on which Borrower wishes to convert any
Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower in
such election. If no election is received with respect to a LIBOR Loan by 11:00
a.m. (Chicago time) on the third (3rd) Business Day prior to the end of the
LIBOR Period with respect thereto (or if a Default or an Event of Default shall
have occurred and be continuing or the additional conditions precedent set forth
in Section 2.2 shall not have been satisfied), that LIBOR Loan shall be
converted to an Index Rate Loan at the end of its LIBOR Period. Borrower must
make such election by notice to Agent in writing, by telecopy or overnight
courier. In the case of any conversion or continuation, such election must be
made pursuant to a written notice (a "Notice of Conversion/Continuation") in the
form of Exhibit 1.5(e). No Loan may be made as or converted into a LIBOR Loan
until five (5) Business Days after the Closing Date and no LIBOR Loan shall have
a LIBOR Period of more than one (1) month until ninety (90) days after the
Closing Date.
(f) Notwithstanding anything to the contrary set forth in this Section 1.5, if a
court of competent jurisdiction determines in a final order that the rate of
interest payable hereunder exceeds the highest rate of interest permissible
under law (the "Maximum Lawful Rate"), then so long as the Maximum Lawful Rate
would be so exceeded, the rate of interest payable hereunder shall be equal to
the Maximum Lawful Rate; provided, however, that if at any time thereafter the
rate of interest payable hereunder is less than the Maximum Lawful Rate,
Borrower shall continue to pay interest hereunder at the Maximum Lawful Rate
until such time as the total interest received by Agent, on behalf of Lenders,
is equal to the total interest which would have been received had the interest
rate payable hereunder been (but for the operation of this paragraph) the
interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.5(a) through (e) above, unless
and until the rate of interest again exceeds the Maximum Lawful Rate, and at
that time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount which such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.11 and thereafter shall refund any excess to Borrower or as a court
of competent jurisdiction may otherwise order.
1.6. Eligible Accounts.
Based on the most recent Borrowing Base Certificate delivered
by Borrower to Agent and on other information available to Agent, Agent shall in
its reasonable credit judgment determine which Accounts of Borrower shall be
"Eligible Accounts" for purposes of this Agreement. In determining whether a
particular Account constitutes an Eligible Account, Agent shall not include any
such Account to which any of the exclusionary criteria set forth below applies.
Agent reserves the right, at any time and from time to time after the Closing
Date, to adjust any such criteria, to establish new criteria and to adjust
advance rates with respect to Eligible Accounts, in its reasonable credit
judgment, subject to the approval of Supermajority Revolving Lenders in the case
of adjustments or new criteria or changes in advance rates which have the effect
of making more credit available. Eligible Accounts shall not include any Account
of Borrower:
(a) which does not arise from the sale of goods or the performance of services
by Borrower in the ordinary course of its business;
(b) (i) upon which Borrower's right to receive payment is not absolute or is
contingent upon the fulfillment of any condition whatsoever or (ii) as to which
Borrower is not able to bring suit or otherwise enforce its remedies against the
Account Debtor through judicial process, or (iii) if the Account represents a
progress billing consisting of an invoice for goods sold or used or services
rendered pursuant to a contract under which the Account Debtor's obligation to
pay that invoice is subject to Borrower's completion of further performance
under such contract or is subject to the equitable lien of a surety bond issuer;
(c) to the extent that any defense, counterclaim, setoff or dispute is asserted
as to such Account;
(d) that is not a true and correct statement of bona fide indebtedness incurred
in the amount of the Account for merchandise sold to or services rendered and
accepted by the applicable Account Debtor;
(e) with respect to which an invoice, acceptable to Agent in form and substance,
has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by Borrower or (ii) is subject to any right, claim,
security interest or other interest of any other Person, other than Liens in
favor of Agent, on behalf of itself and Lenders;
(g) that arises from a sale to any director, officer, other employee or
Affiliate of any Credit Party, or to any entity which has any common officer or
director with any Credit Party (provided, that Accounts owing by Metacom, Inc.
and RNR Music Corp. shall be Eligible Accounts to the extent (i) of the portion
thereof that does not exceed two and one-half percent (2.50%) of the aggregate
amount of all Accounts and (ii) such Accounts are otherwise Eligible Accounts);
(h) that is the obligation of an Account Debtor that is the United States
government or a political subdivision thereof, or any state or municipality or
department, agency or instrumentality thereof unless Agent, in its sole
discretion, has agreed to the contrary in writing and Borrower, if necessary or
desirable, has complied with the Federal Assignment of Claims Act of 1940, and
any amendments thereto, or any applicable state statute or municipal ordinance
of similar purpose and effect with respect to such obligation;
(i) that is the obligation of an Account Debtor located in a foreign country
other than Canada (excluding the provinces of Quebec, Newfoundland, Nova Scotia
and Xxxxxx Xxxxxx Island) unless payment thereof is assured by a letter of
credit assigned and delivered to Agent, satisfactory to Agent as to form, amount
and issuer;
(j) to the extent Borrower or any Subsidiary thereof is liable for goods sold or
services rendered by the applicable Account Debtor to Borrower or any Subsidiary
thereof but only to the extent of the potential offset;
(k) that arises with respect to goods which are delivered on a xxxx-and-hold
(unless the Account Debtor thereof is unconditionally obligated to purchase such
goods), cash-on-delivery basis or placed on consignment, guaranteed sale or
other terms by reason of which the payment by the Account Debtor is or may be
conditional;
(l) that is in default; provided, that, without limiting the generality of the
foregoing, an Account shall be deemed in default upon the occurrence of any of
the following:
(i) it is not paid within the earlier of sixty (60) days following its due
date or one hundred twenty (120) days following its original invoice
date;
(ii) if any Account Debtor obligated upon such Account suspends business,
makes a general assignment for the benefit of creditors or fails to pay
its debts generally as they come due; or
(iii) if any petition is filed by or against any Account Debtor obligated
upon such Account under any bankruptcy law or any other federal, state
or foreign (including any provincial) receivership, insolvency relief
or other law or laws for the relief of debtors;
(m) which is the obligation of an Account Debtor if fifty percent (50%) or more
of the dollar amount of all Accounts owing by that Account Debtor are ineligible
under the other criteria set forth in this Section 1.6;
(n) as to which Agent's Lien thereon, on behalf of itself and Lenders, is not a
first priority perfected Lien;
(o) as to which any of the representations or warranties pertaining to Accounts
set forth in this Agreement or the Security Agreement is untrue;
(p) to the extent such Account is evidenced by a judgment, Instrument or Chattel
Paper;
(q) to the extent such Account exceeds any credit limit established by Agent, in
its reasonable discretion;
(r) to the extent that such Account, together with all other Accounts owing by
such Account Debtor and its Affiliates (other than Microsoft Corporation,
Gateway 2000, Novell and Hewlett Packard) as of any date of determination exceed
ten percent (10%) of all Eligible Accounts, to the extent such Account is owing
by Gateway 2000, Novell or Hewlett Packard, and together with all other Accounts
owing to such Account Debtor and its Affiliates as of any date of determination
exceed thirty-five percent (35%) of all Eligible Accounts, and to the extent
such Account is owing to Microsoft Corporation, together with all other Accounts
owing by Microsoft Corporation and its Affiliates as of any date of
determination exceed fifty percent (50%) of all Eligible Accounts;
(s) which is payable in any currency other than Dollars; or
(t) which is unacceptable to Agent in its reasonable credit judgment.
1.7. Eligible Inventory.
Based on the most recent Borrowing Base Certificate delivered
by Borrower to Agent and on other information available to Agent, Agent shall in
its reasonable credit judgment determine which Inventory of Borrower shall be
"Eligible Inventory" for purposes of this Agreement. In determining whether any
particular Inventory constitutes Eligible Inventory, Agent shall not include any
such Inventory to which any of the exclusionary criteria set forth below
applies. Agent reserves the right, at any time and from time to time after the
Closing Date, to adjust any such criteria, to establish new criteria and to
adjust advance rates with to Eligible Inventory in its reasonable credit
judgment, subject to the approval of Supermajority Revolving Lenders in the case
of adjustments or new criteria or changes in advance rates which have the effect
of making more credit available. Eligible Inventory shall not include any
Inventory of Borrower that:
(a) is not owned by Borrower free and clear of all Liens and rights of any other
Person (including the rights of a purchaser that has made progress payments and
the rights of a surety that has issued a bond to assure Borrower's performance
with respect to that Inventory), except the Liens in favor of Agent, on behalf
of itself and Lenders;
(b) is (i) not located on premises owned by Borrower or (ii) is stored with a
bailee, warehouseman or similar Person or located on premises leased by
Borrower, unless Agent has given its prior consent thereto and unless (x) a
satisfactory bailee letter or landlord waiver has been delivered to Agent, or
(y) Reserves satisfactory to Agent have been established with respect thereto,
or (iii) located at any site if the aggregate book value of Inventory at any
such location is less than $100,000;
(c) is placed on consignment or is in transit;
(d) is covered by a negotiable document of title, unless such document has been
delivered to Agent with all necessary endorsements, free and clear of all Liens
except those in favor of Agent and Lenders;
(e) in Agent's reasonable determination, is excess, obsolete, unsalable,
shopworn, seconds, damaged or unfit for sale;
(f) consists of display items, items bearing a customer's name, logo or product
name or otherwise dedicated to specific customer orders (unless such items are
subject to a sales contract with a customer of Borrower containing terms and
conditions satisfactory to Agent), or packing or shipping materials,
manufacturing supplies, work-in-process Inventory or replacement parts;
(g) consists of goods which have been returned by the buyer;
(h) is not of a type held for sale in the ordinary course of Borrower's
business;
(i) as to which Agent's Lien, on behalf of itself and Lenders, therein is not a
first priority perfected Lien;
(j) as to which any of the representations or warranties pertaining to Inventory
set forth in this Agreement or the Security Agreement is untrue;
(k) consists of any costs associated with "freight-in" charges;
(l) consists of Hazardous Materials or goods that can be transported or sold
only with licenses that are not readily available;
(m) is not covered by casualty insurance acceptable to Agent; or
(n) is otherwise unacceptable to Agent in its reasonable credit judgment.
1.8. Cash Management Systems.
On or prior to the Closing Date, Borrower will establish and
will maintain until the Termination Date, the cash management systems described
on Annex C (the "Cash Management Systems").
1.9. Fees.
(a) Borrower shall pay to GE Capital, individually, the Fees specified in that
certain fee letter dated as of November 27, 1998 between Borrower and GE Capital
(the "GE Capital Fee Letter"), at the times specified for payment therein.
(b) As additional compensation for the Revolving Lenders, Borrower agrees to pay
to Agent, for the ratable benefit of such Lenders, in arrears, on the first
Business Day of each month prior to the Commitment Termination Date and on the
Commitment Termination Date, a fee for Borrower's non-use of available funds in
an amount equal to the Applicable Unused Line Fee Margin per annum (calculated
on the basis of a 360 day year for actual days elapsed) of the difference
between (x) the Maximum Amount (as it may be reduced from time to time) and (y)
the average for the period of the daily closing balances of the Revolving Loan
and the Swing Line Loan outstanding during the period for which the such fee is
due.
(c) If Borrower prepays all or any portion of the Term Loan or prepays the
Revolving Loan and terminates the Revolving Loan Commitment, whether voluntarily
or involuntarily and whether before or after acceleration of the Obligations,
Borrower shall pay to Agent, for the benefit of Lenders as liquidated damages
and compensation for the costs of being prepared to make funds available
hereunder an amount determined by multiplying the Applicable Percentage (as
defined below) by (i) the principal amount of the Term Loan prepaid, and (ii)
the amount of the Revolving Loan Commitment. As used herein, the term
"Applicable Percentage" shall mean, with respect to the Revolving Loan
Commitment, (x) two percent (2%), in the case of a prepayment on or prior to the
first anniversary of the Closing Date, and (y) one percent (1%), in the case of
a prepayment after the first anniversary of the Closing Date but on or prior to
the third anniversary of the Closing Date, and with respect to the Term Loan,
(x) two percent (2%), in the case of a prepayment on or prior to the first
anniversary of the Closing Date, and (y) one percent (1%), in the case of a
prepayment after the first anniversary of the Closing Date but on or prior to
the second anniversary of the Closing Date. Notwithstanding the foregoing, no
prepayment fee shall be payable by Borrower (A) upon a mandatory prepayment made
pursuant to Sections 1.3(b) or 1.16(c); provided that in the case of prepayments
made pursuant to Section 1.3(b)(ii) or (b)(iii), the transaction giving rise to
the applicable prepayment is expressly permitted under Section 6; or (B) upon a
prepayment in full of the Loans and termination of the Revolving Loan Commitment
within ninety (90) days following the date the Applicable Margins are adjusted
pursuant to the proviso set forth in the second paragraph of Section 1.5(a).
1.10. Receipt of Payments.
Borrower shall make each payment under this Agreement not
later than 1:00 p.m. (Chicago time) on the day when due in immediately available
funds in Dollars to the Collection Account. For purposes of determining
Borrowing Availability or Net Borrowing Availability as of any date, all
payments shall be deemed received (i) on the day of receipt of immediately
available funds therefor in the Collection Account, if received prior to 1:00
p.m., Chicago time, and (ii) on the first Business Day after the day of receipt
of immediately available funds therefor in the Collection Account, if received
after 1:00 p.m., Chicago time. For purposes of computing interest, all payments
shall be deemed received (i) on the first Business Day after the date of receipt
of immediately available funds therefor in the Collection Account, if received
prior to 1:00 p.m., Chicago time, and (ii) on the second Business Day after the
day of receipt of immediately available funds therefor in the Collection
Account, if received after 1:00 p.m., Chicago time.
1.11. Application and Allocation of Payments.
(a) So long as no Default or Event of Default shall have occurred and be
continuing, (i) payments consisting of proceeds of Accounts received in the
ordinary course of business shall be applied to the Swing Line Loan and the
Revolving Loan (first, to the portion of the Revolving Loan consisting of Index
Rate Loans and then, to the portion of the Revolving Loan consisting of LIBOR
Loans); (ii) payments matching specific scheduled payments then due shall be
applied to those scheduled payments; (iii) voluntary prepayments shall be
applied as determined by Borrower, subject to the provisions of Section 1.3(a);
and (iv) mandatory prepayments shall be applied as set forth in Sections 1.3(c)
and 1.3(d). All payments and prepayments applied to a particular Loan shall be
applied ratably to the portion thereof held by each Lender as determined by its
Pro Rata Share. As to each other payment, and as to all payments made when a
Default or Event or Default shall have occurred and be continuing or following
the Commitment Termination Date, Borrower hereby irrevocably waives the right to
direct the application of any and all payments received from or on behalf of
Borrower, and Borrower hereby irrevocably agrees that Agent shall have the
continuing exclusive right to apply any and all such payments against the
Obligations as Agent may deem advisable notwithstanding any previous entry by
Agent in the Loan Account or any other books and records. In the absence of a
specific determination by Agent with respect thereto, payments shall be applied
to amounts then due and payable in the following order: (1) to Fees and Agent's
expenses reimbursable hereunder; (2) to interest on the Swing Line Loan; (3) to
principal payments on the Swing Line Loan; (4) to interest on the other Loans,
ratably in proportion to the interest accrued as to each Loan; (5) to principal
payments on the other Loans and to provide cash collateral for Letter of Credit
Obligations in the manner described in Annex B, ratably to the aggregate,
combined principal balance of the other Loans and outstanding Letter of Credit
Obligations; and (6) to all other Obligations including expenses of Lenders to
the extent reimbursable under Section 11.3.
(b) Agent is authorized to, and at its sole election may, charge to the
Revolving Loan balance on behalf of Borrower and cause to be paid all Fees,
expenses, Charges, costs (including insurance premiums in accordance with
Section 5.4(a)) and interest and principal, other than principal of the
Revolving Loan, owing by Borrower under this Agreement or any of the other Loan
Documents if and to the extent Borrower fails to promptly pay any such amounts
as and when due, even if such charges would cause the aggregate balance of the
Revolving Loan and the Swing Line Loan to exceed Borrowing Availability. At
Agent's option and to the extent permitted by law, any charges so made shall
constitute part of the Revolving Loan hereunder.
1.12. Loan Account and Accounting.
Agent shall maintain a loan account (the "Loan Account") on
its books to record: all Advances and the Term Loan, all payments made by
Borrower, and all other debits and credits as provided in this Agreement with
respect to the Loans or any other Obligations. All entries in the Loan Account
shall be made in accordance with Agent's customary accounting practices as in
effect from time to time. The balance in the Loan Account, as recorded on
Agent's most recent printout or other written statement, shall, absent manifest
error, be presumptive evidence of the amounts due and owing to Agent and Lenders
by Borrower; provided that any failure to so record or any error in so recording
shall not limit or otherwise affect Borrower's duty to pay the Obligations.
Agent shall render to Borrower a monthly accounting of transactions with respect
to the Loans setting forth the balance of the Loan Account. Unless Borrower
notifies Agent in writing of any objection to any such accounting (specifically
describing the basis for such objection), within thirty (30) days after the date
thereof, each and every such accounting shall, absent manifest error, be deemed
final, binding and conclusive upon Borrower in all respects as to all matters
reflected therein. Only those items expressly objected to in such notice shall
be deemed to be disputed by Borrower. Notwithstanding any provision herein
contained to the contrary, any Lender may elect (which election may be revoked)
to dispense with the issuance of Notes to that Lender and may rely on the Loan
Account as evidence of the amount of Obligations from time to time owing to it.
1.13. Indemnity.
(a) Borrower shall indemnify and hold harmless each of Agent, Lenders and their
respective Affiliates, and each such Person's respective officers, directors,
employees, attorneys, agents and representatives (each, an "Indemnified
Person"), from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements and other costs of investigation or defense, including those
incurred upon any appeal) which may be instituted or asserted against or
incurred by any such Indemnified Person as the result of credit having been
extended, suspended or terminated under this Agreement and the other Loan
Documents and the administration of such credit, and in connection with or
arising out of the transactions contemplated hereunder and thereunder and any
actions or failures to act in connection therewith, including any and all
Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents (collectively, "Indemnified Liabilities"); provided, that
Borrower shall not be liable for any indemnification to an Indemnified Person to
the extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results from that Indemnified Person's gross negligence or
willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY
OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR
TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION
CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms provided
herein, if (i) any LIBOR Loans are repaid in whole or in part prior to the last
day of any applicable LIBOR Period (whether that repayment is made pursuant to
any provision of this Agreement or any other Loan Document or is the result of
acceleration, by operation of law or otherwise); (ii) Borrower shall default in
payment when due of the principal amount of or interest on any LIBOR Loan; (iii)
Borrower shall default in making any borrowing of, conversion into or
continuation of LIBOR Loans after Borrower has given notice requesting the same
in accordance herewith; or (iv) Borrower shall fail to make any prepayment of a
LIBOR Loan after Borrower has given a notice thereof in accordance herewith,
Borrower shall indemnify and hold harmless each Lender from and against all
losses, costs and expenses resulting from or arising from any of the foregoing.
Such indemnification shall include any loss (including loss of margin) or
expense arising from the reemployment of funds obtained by it or from fees
payable to terminate deposits from which such funds were obtained. For the
purpose of calculating amounts payable to a Lender under this subsection, each
Lender shall be deemed to have actually funded its relevant LIBOR Loan through
the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal
to the amount of that LIBOR Loan and having a maturity comparable to the
relevant LIBOR Period; provided, however, that each Lender may fund each of its
LIBOR Loans in any manner it sees fit, and the foregoing assumption shall be
utilized only for the calculation of amounts payable under this subsection. This
covenant shall survive the termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder. As promptly as practicable under
the circumstances, each Lender shall provide Borrower with its written
calculation of all amounts payable pursuant to this Section 1.13(b), and such
calculation shall be binding on the parties hereto unless Borrower shall object
in writing within ten (10) Business Days of receipt thereof, specifying the
basis for such objection in detail.
1.14. Access.
Borrower shall, during normal business hours, from time to
time upon three (3) Business Days' prior notice as frequently as Agent
determines to be appropriate: (a) provide Agent and any of its officers,
employees and agents access to its properties, facilities, advisors and
employees (including officers) of each Credit Party and to the Collateral, (b)
permit Agent, and any of its officers, employees and agents, to inspect, audit
and make extracts from any Credit Party's books and records, and (c) permit
Agent, and its officers, employees and agents, to inspect, review, evaluate and
make test verifications and counts of the Accounts, Inventory and other
Collateral of any Credit Party; provided, that so long as no Event of Default
exists, Borrower shall not be liable under Section 11.3(f) for more than two (2)
such inspections in any Fiscal Year. If a Default or Event of Default shall have
occurred and be continuing or if access is necessary to preserve or protect the
Collateral as determined by the Agent, Borrower shall provide such access to
Agent and to each Lender at all times and without advance notice. Furthermore,
so long as any Event of Default shall have occurred and be continuing, Borrower
shall provide Agent and each Lender with access to its suppliers and customers.
Borrower shall make available to Agent and its counsel, as quickly as is
possible under the circumstances, originals or copies of all books and records
which Agent may request. Borrower shall deliver any document or instrument
necessary for Agent, as it may from time to time request, to obtain records from
any service bureau or other Person which maintains records for any Credit Party,
and shall maintain duplicate records or supporting documentation on media,
including computer tapes and discs owned by any Credit Party. Agent will give
Lenders at least ten (10) days' prior written notice of regularly scheduled
audits. Representatives of other Lenders may accompany Agent's representatives
on regularly scheduled audits at no charge to Borrower.
1.15. Taxes.
(a) Any and all payments by Borrower hereunder or under the Notes shall be made,
in accordance with this Section 1.15, free and clear of and without deduction
for any and all present or future Taxes. If Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under the
Notes, (i) the sum payable shall be increased as much as shall be necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 1.15) Agent or Lenders, as
applicable, receive an amount equal to the sum they would have received had no
such deductions been made, (ii) Borrower shall make such deductions, and (iii)
Borrower shall pay the full amount deducted to the relevant taxing or other
authority in accordance with applicable law. Within thirty (30) days after the
date of any payment of Taxes, Borrower shall furnish to Agent the original or a
certified copy of a receipt or other documentation evidencing payment thereof.
(b) Borrower shall indemnify and, within ten (10) days of demand therefor, pay
Agent and each Lender for the full amount of Taxes (including any Taxes imposed
by any jurisdiction on amounts payable under this Section 1.15) paid by Agent or
such Lender, as appropriate, and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes were correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction outside the United
States (a "Foreign Lender") as to which payments to be made under this Agreement
or under the Notes are exempt from United States withholding tax under an
applicable statute or tax treaty shall provide to Borrower and Agent a properly
completed and executed IRS Form 4224 or Form 1001 or other applicable form,
certificate or document prescribed by the IRS or the United States certifying as
to such Foreign Lender's entitlement to such exemption (a "Certificate of
Exemption"). Any foreign Person that seeks to become a Lender under this
Agreement shall provide a Certificate of Exemption to Borrower and Agent prior
to becoming a Lender hereunder. No foreign Person may become a Lender hereunder
if such Person is unable to deliver a Certificate of Exemption.
1.16. Capital Adequacy; Increased Costs; Illegality.
(a) If any Lender shall have determined that any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by any
Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law),
in each case, adopted after the Closing Date, from any central bank or other
Governmental Authority increases or would have the effect of increasing the
amount of capital, reserves or other funds required to be maintained by such
Lender and thereby reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder, then Borrower shall from time to time
upon demand by such Lender (with a copy of such demand to Agent) pay to Agent,
for the account of such Lender, additional amounts sufficient to compensate such
Lender for such reduction. A certificate as to the amount of that reduction and
showing the basis of the computation thereof submitted by such Lender to
Borrower and to Agent shall, absent manifest error, be final, conclusive and
binding for all purposes.
(b) If, due to either (i) the introduction of or any change in any law or
regulation (or any change in the interpretation thereof) or (ii) the compliance
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), in each case adopted after
the Closing Date, there shall be any increase in the cost to any Lender of
agreeing to make or making, funding or maintaining any Loan, then Borrower shall
from time to time, upon demand by such Lender (with a copy of such demand to
Agent), pay to Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost. A certificate as
to the amount of such increased cost, submitted to Borrower and to Agent by such
Lender, shall be conclusive and binding on Borrower for all purposes, absent
manifest error. Each Lender agrees that, as promptly as practicable after it
becomes aware of any circumstances referred to above which would result in any
such increased cost, the affected Lender shall, to the extent not inconsistent
with such Lender's internal policies of general application, use reasonable
commercial efforts to minimize costs and expenses incurred by it and payable to
it by Borrower pursuant to this Section 1.16(b).
(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower through Agent,
(i) the obligation of such Lender to agree to make or to make or to continue to
fund or maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith
prepay in full all outstanding LIBOR Loans owing to such Lender, together with
interest accrued thereon, unless Borrower, within five (5) Business Days after
the delivery of such notice and demand, converts all such Loans into a Loan
bearing interest based on the Index Rate.
(d) Replacement of Lender in Respect of Increased Costs. Within fifteen (15)
days after receipt by Borrower of written notice and demand from any Lender (an
"Affected Lender") for payment of additional amounts or increased costs as
provided in Section 1.15(a), 1.16(a) or 1.16(b), Borrower may, at its option,
notify Agent and such Affected Lender of its intention to replace the Affected
Lender. So long as no Default or Event of Default shall have occurred and be
continuing, Borrower, with the consent of Agent, may obtain, at Borrower's
expense, a replacement Lender ("Replacement Lender") for the Affected Lender,
which Replacement Lender must be satisfactory to Agent. If Borrower obtains a
Replacement Lender within ninety (90) days following notice of its intention to
do so, the Affected Lender must sell and assign its Loans and Commitments to
such Replacement Lender for an amount equal to the principal balance of all
Loans held by the Affected Lender and all accrued interest and Fees with respect
thereto through the date of such sale, provided that Borrower shall have
reimbursed such Affected Lender for the additional amounts or increased costs
that it is entitled to receive under this Agreement through the date of such
sale and assignment.
Notwithstanding the foregoing, Borrower shall not have the right to obtain a
Replacement Lender if the Affected Lender rescinds its demand for increased
costs or additional amounts within fifteen (15) days following its receipt of
Borrower's notice of intention to replace such Affected Lender. Furthermore, if
Borrower gives a notice of intention to replace and does not so replace such
Affected Lender within ninety (90) days thereafter, Borrower's rights under this
Section 1.16(d) shall terminate and Borrower shall promptly pay all increased
costs or additional amounts demanded by such Affected Lender pursuant to
Sections 1.15(a), 1.16(a) and 1.16(b).
1.17. Single Loan.
All Loans to Borrower and all of the other Obligations of
Borrower arising under this Agreement and the other Loan Documents shall
constitute one general obligation of Borrower secured, until the Termination
Date, by all of its Collateral.
2. CONDITIONS PRECEDENT
2.1. Conditions to the Initial Loans.
No Lender shall be obligated to make any Loan or incur any
Letter of Credit Obligations on the Closing Date, or to take, fulfill, or
perform any other action hereunder, until the following conditions have been
satisfied or provided for in a manner satisfactory to Agent, or waived in
writing by Agent and Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or counterparts hereof
shall have been duly executed by, and delivered to, Borrower, Agent and Lenders;
and Agent shall have received such documents, instruments, agreements and legal
opinions as Agent shall reasonably request in connection with the transactions
contemplated by this Agreement and the other Loan Documents, including all those
listed in the Closing Checklist attached hereto as Annex D, each in form and
substance satisfactory to Agent.
(b) Repayment of Prior Lender Obligations; Satisfaction of Outstanding L/Cs. (i)
Agent shall have received a fully executed original of a pay-off letter
satisfactory to Agent confirming that all of the Prior Lender Obligations will
be repaid in full from the proceeds of the Term Loan and the initial Revolving
Credit Advance and all Liens upon any of the property of Borrower or any of its
Subsidiaries in favor of Prior Lender shall be terminated by Prior Lender
immediately upon such payment; and (ii) all letters of credit issued or
guaranteed by Prior Lender shall have been cash collateralized, supported by a
guaranty of Agent or supported by a Letter of Credit issued pursuant to Annex B,
as mutually agreed upon by Agent, Borrower and Prior Lender.
(c) Approvals. Agent shall have received (i) satisfactory evidence that the
Credit Parties have obtained all required consents and approvals of all Persons
including all requisite Governmental Authorities, to the execution, delivery and
performance of this Agreement and the other Loan Documents and the consummation
of the Related Transactions or (ii) an officer's certificate in form and
substance satisfactory to Agent affirming that no such consents or approvals are
required.
(d) Opening Availability; Solvency. The Eligible Accounts and Eligible Inventory
of Borrower supporting the initial Revolving Credit Advance and the initial
Letter of Credit Obligations incurred and the amount of the Reserves to be
established on the Closing Date shall be sufficient in value, as determined by
Agent, to provide Borrower with Net Borrowing Availability, after giving effect
to the initial Revolving Credit Advance, the incurrence of any initial Letter of
Credit Obligations and the consummation of the Related Transactions (on a pro
forma basis, with trade payables being paid currently, and expenses and
liabilities being paid in the ordinary course of business and without
acceleration of sales) of at least the amount by which $15,000,000 exceeds the
"Net Borrowing Availability" (as defined in the Canadian Credit Agreement) after
giving effect to the initial "Revolving Credit Advance" (as defined in the
Canadian Credit Agreement). After giving effect to the Related Transactions,
Credit Parties shall be Solvent, on a consolidated and consolidating basis; and
Borrower's consolidated Pro Forma attached hereto as Disclosure Schedule 3.4(b)
shall reflect stockholders common equity of at least $49,000,000.
(e) Payment of Fees. Borrower shall have paid the Fees required to be paid on
the Closing Date in the respective amounts specified in Section 1.9 (including
the Fees specified in the GE Capital Fee Letter), and shall have reimbursed
Agent for all fees, costs and expenses of closing presented as of the Closing
Date.
(f) Due Diligence; Capital Structure; Other Indebtedness. Agent and the Lenders
shall have completed all business and legal due diligence and the results
thereof shall be satisfactory to Agent and Lenders. The capital structure of
each Credit Party and the terms and conditions of all Indebtedness of each
Credit Party shall be acceptable to Agent in its sole discretion. The aggregate
principal amount of Indebtedness of the Credit Parties as of the Closing Date
(after giving effect to the funding of the initial Loans hereunder) shall not
exceed $20,000,000.
(g) Consummation of Related Transactions. Agent shall have received fully
executed copies of each Acquisition Agreement and each of the other Related
Transactions Documents, each of which shall be in form and substance
satisfactory to Agent and its counsel. Without limiting the discretion of Agent
and its counsel to determine whether the Acquisition Agreements and other
Related Transaction Documents are satisfactory, the aggregate consideration paid
under the Acquisition Agreements shall not exceed $37,500,000 and the aggregate
fees and costs incurred by Credit Parties in connection with the Related
Transactions (including the fees and expenses of Agent and Lenders) shall not
exceed $2,500,000. Upon the initial funding of the Loans, the Acquisition and
the other Related Transactions shall have been consummated in accordance with
the terms of the Acquisition Agreements and the other Related Transactions
Documents.
(h) Consummation of Canadian Loan Transactions. Agent shall have received fully
executed copies of the Canadian Credit Agreement and each of the other Canadian
Loan Documents, each of which shall be in form and substance satisfactory to
Agent and its counsel. All of the conditions precedent set forth in the Canadian
Loan Documents shall have been satisfied in full.
2.2. Further Conditions to Each Loan.
Except as otherwise expressly provided herein, no Lender shall
be obligated to fund any Loan, convert or continue any Loan as a LIBOR Loan or
incur any Letter of Credit Obligation, if, as of the date thereof:
(a) Any representation or warranty by any Credit Party contained herein or in
any of the other Loan Documents shall be untrue or incorrect in any material
respect as of such date, except to the extent that such representation or
warranty expressly relates to an earlier date and except for changes therein
expressly permitted or expressly contemplated by this Agreement, and Agent or
Requisite Revolving Lenders shall have determined not to make such Loan, convert
or continue such Loan as a LIBOR Loan, or incur such Letter of Credit Obligation
due to the fact that such warranty or representation is untrue or incorrect; or
(b) Any event or circumstance having a Material Adverse Effect shall have
occurred since the date hereof as determined in good faith by the Requisite
Revolving Lenders; or
(c) Any Default or Event of Default shall have occurred and be continuing or
would result after giving effect to any Loan or the incurrence of any Letter of
Credit Obligation, and Agent or Requisite Revolving Lenders shall have
determined not to make such Loan, convert or continue such Loan as a LIBOR Loan,
or incur such Letter of Credit Obligation on the basis of such Default or Event
of Default;
(d) After giving effect to any Advance (or the incurrence of any Letter of
Credit Obligations), the outstanding principal amount of the Revolving Loan
would exceed the lesser of the Borrowing Base and the Maximum Amount, less, in
each case, the then outstanding principal amount of the Swing Line Loan; or
(e) After giving effect to any Swing Line Advance, the outstanding principal
amount of the Swing Line Loan would exceed Swing Line Availability.
The request and acceptance by Borrower of the proceeds of any Loan, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan, as the case may be, shall be deemed to
constitute, as of the date of such request or acceptance, (i) a representation
and warranty by Borrower that the conditions in this Section 2.2 have been
satisfied and (ii) a reaffirmation by Borrower of the granting and continuance
of Agent's Liens, on behalf of itself and Lenders, pursuant to the Collateral
Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of
Credit Obligations, Borrower makes the following representations and warranties
to Agent and each Lender, after giving effect to the Acquisition, with respect
to all Credit Parties, each and all of which shall survive the execution and
delivery of this Agreement.
3.1. Corporate Existence; Compliance with Law.
Each Credit Party (a) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation; (b) is duly qualified to conduct business and is in good standing
in each other jurisdiction where its ownership or lease of property or the
conduct of its business requires such qualification, except where the failure to
be so qualified would not result in exposure to losses, damages or liabilities
in excess of $50,000; (c) has the requisite corporate power and authority and
the legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease and to conduct its
business as now, heretofore and proposed to be conducted; (d) subject to
specific representations regarding Environmental Laws, has all licenses,
permits, consents or approvals from or by, and has made all filings with, and
has given all notices to, all Governmental Authorities having jurisdiction, to
the extent required for such ownership, operation and conduct; (e) is in
compliance with its charter and by-laws; and (f) subject to specific
representations set forth herein regarding ERISA, Environmental Laws, tax and
other laws, is in compliance with all applicable provisions of law, except where
the failure to comply, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
3.2. Executive Offices; FEIN.
As of the Closing Date, the current location of each Credit
Party's chief executive office and principal place of business is set forth in
Disclosure Schedule (3.2), and none of such locations have changed within the
twelve (12) months preceding the Closing Date. In addition, Disclosure Schedule
(3.2) lists the federal employer identification number of each Credit Party.
3.3. Corporate Power, Authorization, Enforceable Obligations.
The execution, delivery and performance by each Credit Party
of the Loan Documents to which it is a party and the creation of all Liens
provided for therein: (a) are within such Person's corporate power; (b) have
been duly authorized by all necessary or proper corporate and shareholder
action; (c) do not contravene any provision of such Person's charter or bylaws;
(d) do not violate any law or regulation, or any order or decree of any court or
Governmental Authority; (e) do not conflict with or result in the breach or
termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any indenture, mortgage, deed of
trust, lease, agreement or other instrument to which such Person is a party or
by which such Person or any of its property is bound; (f) do not result in the
creation or imposition of any Lien upon any of the property of such Person other
than those in favor of Agent, on behalf of itself and Lenders, pursuant to the
Loan Documents; and (g) do not require the consent or approval of any
Governmental Authority or any other Person, except those referred to in Section
2.1(c), all of which will have been duly obtained, made or complied with prior
to the Closing Date. On or prior to the Closing Date, each of the Loan Documents
shall have been duly executed and delivered by each Credit Party thereto and
each such Loan Document shall then constitute a legal, valid and binding
obligation of such Credit Party enforceable against it in accordance with its
terms.
3.4. Financial Statements and Projections.
(a) The following Financial Statements attached hereto as Disclosure Schedule
(3.4(A)) have been delivered on the date hereof:
(i) The audited consolidated balance sheets at December 26, 1996 and
December 27, 1997 and the related statements of income and cash flows
of Borrower and its Subsidiaries for the Fiscal Years then ended,
certified by Xxxxxx Xxxxxxxx LLP.
(ii) The unaudited balance sheet(s) at November 20, 1998 and the related
statement(s) of income and cash flows of Borrower and its Subsidiaries
for the eleven (11) month period then ended.
All Financial Statements concerning Borrower and its Subsidiaries which are
referenced in this clause (a) have been prepared in accordance with GAAP
consistently applied throughout the periods covered (except as disclosed therein
and except, with respect to unaudited Financial Statements, for the absence of
footnotes and normal year-end audit adjustments) and present fairly in all
material respects the financial position of the Persons covered thereby as at
the dates thereof and the results of their operations and cash flows for the
periods then ended.
(b) Borrower has also delivered the Xxxxxx Xxxxxxxx Preliminary Report of
Financial Due Diligence with respect to KAO Infosystems Company dated November,
1998 (the "AA Report") which is attached as Disclosure Schedule (3.4(B)).
(c) Pro Forma. The Pro Forma delivered on the date hereof and attached hereto as
Disclosure Schedule (3.4(C)) was prepared by Borrower giving pro forma effect to
the Related Transactions, and was based on the unaudited consolidated and
consolidating balance sheets of Borrower and its Subsidiaries dated September
25, 1998, which was prepared in accordance with GAAP, with only such adjustments
thereto as would be required in accordance with GAAP, and the AA Report.
(d) Projections. The Projections delivered on the date hereof and attached
hereto as Disclosure Schedule (3.4(D)) have been prepared by Borrower in light
of the past operations of its businesses, but including future payments of known
contingent liabilities reflected on the Fair Salable Balance Sheet, and reflect
projections for the five (5) year period beginning on January 1, 1999 on a
quarter by quarter basis for the first year and on a year by year basis
thereafter. The Projections are based upon estimates and assumptions stated
therein, all of which Borrower believes to be reasonable and fair in light of
current conditions and current facts known to Borrower and, as of the Closing
Date, reflect Borrower's good faith and reasonable estimates of the future
financial performance of Borrower and of the other information projected therein
for the period set forth therein.
(e) Fair Salable Balance Sheet. The Fair Salable Balance Sheet delivered on the
date hereof and attached hereto as Disclosure Schedule (3.4(E)) was prepared by
Borrower on the same basis as the Pro Forma, except that Borrower's assets are
set forth therein at their fair salable values on a going concern basis and the
liabilities set forth therein include all contingent liabilities of Borrower
stated at the reasonably estimated present values thereof.
3.5. Material Adverse Effect.
Between December 27, 1997 and the Closing Date, (a) neither
any Credit Party nor, to Borrower's knowledge, any of the businesses acquired
from Sellers pursuant to the Acquisition Agreements has incurred any
obligations, contingent or non-contingent liabilities, liabilities for Charges,
long-term leases or unusual forward or long-term commitments which are not
reflected in the Pro Forma and which, alone or in the aggregate, could
reasonably be expected to have a Material Adverse Effect (provided, that Agent
acknowledges that the deterioration in the financial position of Sellers for the
year to date period ending August 31, 1998 as compared to the year ending
December 31, 1997 shall not be taken into account for the purposes hereof), (b)
no contract, lease or other agreement or instrument has been entered into or
assumed by any Credit Party or has become binding upon any Credit Party's assets
and no law or regulation applicable to any Credit Party has been adopted which
has had or could reasonably be expected to have a Material Adverse Effect, and
(c) no Credit Party is in default and to the best of Borrower's knowledge no
third party is in default under any material contract, lease or other agreement
or instrument, which alone or in the aggregate could reasonably be expected to
have a Material Adverse Effect. Between December 27, 1997 and the Closing Date
no event has occurred, which alone or together with other events, could
reasonably be expected to have a Material Adverse Effect.
3.6. Ownership of Property; Liens.
As of the Closing Date, the real estate ("Real Estate") listed
on Disclosure Schedule (3.6) constitutes all of the real property owned, leased,
subleased, or used by any Credit Party. Each Credit Party owns good and
marketable fee simple title to all of its owned real estate, and valid and
marketable leasehold interests in all of its leased Real Estate, all as
described on Disclosure Schedule (3.6), and copies of all such leases or a
summary of terms thereof satisfactory to Agent have been delivered to Agent.
Disclosure Schedule (3.6) further describes any Real Estate with respect to
which any Credit Party is a lessor, sublessor or assignor as of the Closing
Date. Each Credit Party also has good and marketable title to, or valid
leasehold interests in, all of its personal properties and assets. As of the
Closing Date, none of the properties and assets of any Credit Party are subject
to any Liens other than Permitted Encumbrances, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Each Credit Party has received all deeds, assignments, waivers,
consents, non-disturbance and recognition or similar agreements, bills of sale
and other documents, and has duly effected all recordings, filings and other
actions necessary to establish, protect and perfect such Credit Party's right,
title and interest in and to all such Real Estate and other properties and
assets. Disclosure Schedule (3.6) also describes any purchase options, rights of
first refusal or other similar contractual rights pertaining to any Real Estate.
As of the Closing Date, no portion of any Credit Party's Real Estate has
suffered any material damage by fire or other casualty loss which has not
heretofore been repaired and restored in all material respects to its original
condition or otherwise remedied. As of the Closing Date, all material permits
required to have been issued or appropriate to enable the Real Estate to be
lawfully occupied and used for all of the purposes for which they are currently
occupied and used have been lawfully issued and are in full force and effect.
3.7. Labor Matters.
As of the Closing Date (a) no strikes or other material labor
disputes against any Credit Party are pending or, to any Credit Party's
knowledge, threatened; (b) hours worked by and payment made to employees of each
Credit Party comply with the Fair Labor Standards Act and each other federal,
state, local or foreign law applicable to such matter; (c) all payments due from
any Credit Party for employee health and welfare insurance have been paid or
accrued as a liability on the books of such Credit Party; (d) except as set
forth in Disclosure Schedule (3.7), no Credit Party is a party to or bound by
any collective bargaining agreement, management agreement, consulting agreement
or any employment agreement (and true and complete copies of any agreements
described on Disclosure Schedule (3.7) have been delivered to Agent); (e) there
is no organizing activity involving any Credit Party pending or, to any Credit
Party's knowledge, threatened by any labor union or group of employees; (f)
there are no representation proceedings pending or, to any Credit Party's
knowledge, threatened with the National Labor Relations Board, and no labor
organization or group of employees of any Credit Party has made a pending demand
for recognition; and (g) except as set forth in Disclosure Schedule (3.7), there
are no complaints or charges against any Credit Party pending or, to the
knowledge of any Credit Party, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by any Credit
Party of any individual.
3.8. Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness.
Except as set forth in Disclosure Schedule (3.8), no Credit
Party has any Subsidiaries, is engaged in any joint venture or partnership with
any other Person, or is an Affiliate of any other Person. All of the issued and
outstanding Stock of each Subsidiary of Borrower is set forth on Disclosure
Schedule (3.8). Except as set forth in Disclosure Schedule (3.8), there are no
outstanding rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock or
other equity securities of its Subsidiaries. All outstanding Indebtedness of
each Credit Party as of the Closing Date is described in Section 6.3 (including
Disclosure Schedule (6.3)).
3.9. Government Regulation.
No Credit Party is an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940 as
amended. No Credit Party is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, or any other federal or
state statute that restricts or limits its ability to incur Indebtedness or to
perform its obligations hereunder. The making of the Loans by Lenders to
Borrower, the incurrence of the Letter of Credit Obligations on behalf of
Borrower, the application of the proceeds thereof and repayment thereof and the
consummation of the Related Transactions will not violate any provision of any
such statute or any rule, regulation or order issued by the Securities and
Exchange Commission.
3.10. Margin Regulations.
No Credit Party is engaged, nor will it engage, principally or
as one of its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin security" as such terms are
defined in Regulation U or G of the Federal Reserve Board as now and from time
to time hereafter in effect (such securities being referred to herein as "Margin
Stock"). No Credit Party owns any Margin Stock, and none of the proceeds of the
Loans or other extensions of credit under this Agreement will be used, directly
or indirectly, for the purpose of purchasing or carrying any Margin Stock, for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry any Margin Stock or for any other purpose which
might cause any of the Loans or other extensions of credit under this Agreement
to be considered a "purpose credit" within the meaning of Regulation G, T, U or
X of the Federal Reserve Board. No Credit Party will take or permit to be taken
any action which might cause any Loan Document to violate any regulation of the
Federal Reserve Board.
3.11. Taxes.
All tax returns, reports and statements, including information
returns, required by any Governmental Authority to be filed by any Credit Party
have been filed with the appropriate Governmental Authority and all Charges have
been paid prior to the date on which any fine, penalty, interest or late charge
may be added thereto for nonpayment thereof (or any such fine, penalty,
interest, late charge or loss has been paid), excluding Charges or other amounts
being contested in accordance with Section 5.2(b). Proper and accurate amounts
have been withheld by each Credit Party from its respective employees for all
periods in full and complete compliance with all applicable federal, state,
local and foreign law and such withholdings have been timely paid to the
respective Governmental Authorities. Disclosure Schedule (3.11) sets forth as of
the Closing Date those taxable years for which any Credit Party's tax returns
are currently being audited by the IRS or any other applicable Governmental
Authority and any assessments or threatened assessments in connection with such
audit, or otherwise currently outstanding. Except as described on Disclosure
Schedule (3.11), no Credit Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges.
None of the Credit Parties and their respective predecessors are liable for any
Charges: (a) under any agreement (including any tax sharing agreements) or (b)
to each Credit Party's knowledge, as a transferee. As of the Closing Date, no
Credit Party has agreed or been requested to make any adjustment under IRC
Section 481(a), by reason of a change in accounting method or otherwise, which
would have a Material Adverse Effect.
3.12. ERISA.
(a) Disclosure Schedule (3.12) lists and separately identifies all Title IV
Plans, Multiemployer Plans, ESOPs and Retiree Welfare Plans. Copies of all such
listed Plans, together with a copy of the latest form 5500 for each such Plan,
have been delivered to Agent. Except with respect to Multiemployee Plans, each
Qualified Plan has been determined by the IRS to qualify under Section 401 of
the IRC, and the trusts created thereunder have been determined to be exempt
from tax under the provisions of Section 501 of the IRC, and nothing has
occurred which would cause the loss of such qualification or tax exempt status.
Each Plan is in compliance with the applicable provisions of ERISA and the IRC,
including the filing of reports required under the IRC or ERISA. No Credit Party
or ERISA Affiliate has failed to make any contribution or pay any amount due as
required by either Section 412 of the IRC or Section 302 of ERISA or the terms
of any such Plan. No Credit Party or ERISA Affiliate has engaged in a prohibited
transaction, as defined in Section 4975 of the IRC, in connection with any Plan,
which would subject any Credit Party to a material tax on prohibited
transactions imposed by Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title IV Plan has
any Unfunded Pension Liability; (ii) no ERISA Event or event described in
Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
any Credit Party, threatened claims (other than claims for benefits in the
normal course), sanctions, actions or lawsuits, asserted or instituted against
any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no Credit Party
or ERISA Affiliate has incurred or reasonably expects to incur any liability as
a result of a complete or partial withdrawal from a Multiemployer Plan; (v)
within the last five (5) years no Title IV Plan with Unfunded Pension
Liabilities has been transferred outside of the "controlled group" (within the
meaning of Section 4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate;
and (vi) no liability under any Title IV Plan has been satisfied with the
purchase of a contract from an insurance company that is not rated AAA by the
Standard & Poor's Corporation or the equivalent by another nationally recognized
rating agency.
3.13. No Litigation.
No action, claim, lawsuit, demand, investigation or proceeding
is now pending or, to the knowledge of any Credit Party, threatened against any
Credit Party, before any Governmental Authority or before any arbitrator or
panel of arbitrators (collectively, "Litigation"), (a) which challenges any
Credit Party's right or power to enter into or perform any of its obligations
under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) which
has a reasonable risk of being determined adversely to any Credit Party and
which, if so determined, could have a Material Adverse Effect. Except as set
forth on Disclosure Schedule (3.13), as of the Closing Date there is no
Litigation pending or threatened which seeks damages in excess of $100,000 or
injunctive relief or alleges criminal misconduct of any Credit Party.
3.14. Brokers.
No broker or finder acting on behalf of any Credit Party
brought about the obtaining, making or closing of the Loans or the Related
Transactions, and no Credit Party has any obligation to any Person in respect of
any finder's or brokerage fees in connection therewith.
3.15. Intellectual Property.
As of the Closing Date, each Credit Party owns or has rights
to use all Intellectual Property necessary to continue to conduct its business
as now or heretofore conducted by it or proposed to be conducted by it, and each
Patent, Trademark, Copyright and License is listed, together with application or
registration numbers, as applicable, in Disclosure Schedule (3.15) hereto. Each
Credit Party conducts its business and affairs without infringement of or
interference with any Intellectual Property of any other Person.
3.16. Full Disclosure.
No information contained in this Agreement, any of the other
Loan Documents, any Projections, Financial Statements or Collateral Reports or
other reports from time to time delivered hereunder or any written statement
furnished by or on behalf of any Credit Party to Agent or any Lender pursuant to
the terms of this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading in light of the
circumstances under which they were made. The Liens granted to Agent, on behalf
of itself and Lenders, pursuant to the Collateral Documents will at all times be
fully perfected first priority Liens in and to the Collateral described therein,
subject, as to priority, only to Permitted Encumbrances with respect to the
Collateral other than Accounts.
3.17. Environmental Matters.
(a) Except as set forth in Disclosure Schedule (3.17), as of the Closing Date:
(i) the Credit Parties are and have been in compliance with all Environmental
Laws, except for such noncompliance which would not result in Environmental
Liabilities which could reasonably be expected to exceed $25,000; (ii) the
Credit Parties have obtained, and are in compliance with, all Environmental
Permits required by Environmental Laws for the operations of their respective
businesses as presently conducted or as proposed to be conducted, except where
the failure to so obtain or comply with such Environmental Permits would not
result in Environmental Liabilities which could reasonably be expected to exceed
$25,000, and all such Environmental Permits are valid, uncontested and in good
standing; (iii) no Credit Party is involved in operations or knows of any facts,
circumstances or conditions, including any Releases of Hazardous Materials, that
are likely to result in any Environmental Liabilities of such Credit Party which
could reasonably be expected to exceed $25,000, and no Credit Party has
permitted any current or former tenant or occupant of the Real Estate to engage
in any such operations; (iv) there is no Litigation arising under or related to
any Environmental Laws, Environmental Permits or Hazardous Material which seeks
damages, penalties, fines, costs or expenses in excess of $25,000 or injunctive
relief, or which alleges criminal misconduct by any Credit Party; (v) no notice
has been received by any Credit Party identifying it as a "potentially
responsible party" or requesting information under CERCLA or analogous state
statutes, and to the knowledge of the Credit Parties, there are no facts,
circumstances or conditions that may result in any Credit Party being identified
as a "potentially responsible party" under CERCLA or analogous state statutes;
and (vi) the Credit Parties have provided to Agent copies of all existing
environmental reports, reviews and audits and all written information pertaining
to actual or potential Environmental Liabilities, in each case relating to any
Credit Party.
(b) Borrower hereby acknowledges and agrees that Agent (i) is not now, and has
not ever been, in control of any of the Real Estate or any Credit Party's
affairs, and (ii) does not have the capacity through the provisions of the Loan
Documents or otherwise to influence any Credit Party's conduct with respect to
the ownership, operation or management of any of its Real Estate or compliance
with Environmental Laws or Environmental Permits.
3.18. Insurance.
Disclosure Schedule (3.18) lists all insurance policies of any
nature maintained, as of the Closing Date, for current occurrences by each
Credit Party, as well as a summary of the terms of each such policy.
3.19. Deposit and Disbursement Accounts.
Disclosure Schedule (3.19) lists all banks and other financial
institutions at which any Credit Party (other than the Irish Subsidiary and the
Irish Indirect Subsidiary) maintains deposits and/or other accounts as of the
Closing Date, including any Disbursement Accounts, and such Schedule correctly
identifies the name, address and telephone number of each depository, the name
in which the account is held, a description of the purpose of the account, and
the complete account number.
3.20. Government Contracts.
Except as set forth in Disclosure Schedule (3.20), as of the
Closing Date, no Credit Party is a party to any contract or agreement with any
Governmental Authority and no Credit Party's Accounts are subject to the Federal
Assignment of Claims Act, as amended (31 U.S.C. Section 3727) or any similar
state or local law.
3.21. Customer and Trade Relations.
As of the Closing Date, there exists no actual or, to the
knowledge of any Credit Party, threatened termination or cancellation of, or any
material adverse modification or change in, the business relationship of any
Credit Party with any customer (other than Hewlett Packard and Xxxxxxxx) or
group of customers whose purchases during the preceding twelve (12) months
caused them to be ranked among the ten largest customers of such Credit Party;
or the business relationship of any Credit Party with any supplier material to
its operations.
3.22. Agreements and Other Documents.
As of the Closing Date, each Credit Party has provided to
Agent or its counsel, on behalf of Lenders, accurate and complete copies (or
summaries) of all of the following agreements or documents to which any it is
subject and each of which are listed on Disclosure Schedule (3.22): supply
agreements and purchase agreements not terminable by such Credit Party within
sixty (60) days following written notice issued by such Credit Party and
involving transactions in excess of $1,000,000 per annum; any lease of Equipment
having a remaining term of one (1) year or longer and requiring aggregate rental
and other payments in excess of $500,000 per annum; licenses and permits held by
the Credit Parties, the absence of which could be reasonably likely to have a
Material Adverse Effect; instruments or documents evidencing Indebtedness of
such Credit Party and any security interest granted by such Credit Party with
respect thereto; and instruments and agreements evidencing the issuance of any
equity securities, warrants, rights or options to purchase equity securities of
such Credit Party.
3.23. Solvency.
Both before and after giving effect to (a) the Loans and
Letter of Credit Obligations to be made or extended on the Closing Date or such
other date as Loans and Letter of Credit Obligations requested hereunder are
made or extended, (b) the disbursement of the proceeds of such Loans pursuant to
the instructions of Borrower, (c) the Acquisition, the Refinancing and the
consummation of the other Related Transactions and (d) the payment and accrual
of all transaction costs in connection with the foregoing, each Credit Party is
Solvent.
3.24. Year 2000 Representations.
Each Credit Party has completed a Year 2000 Assessment, a
copy of which has been delivered to Agent.
3.25. Acquisition Agreements.
As of the Closing Date, Borrower has delivered to Agent a
complete and correct copy of each Acquisition Agreement (including all
schedules, exhibits, amendments, supplements, modifications, assignments and all
other documents delivered pursuant thereto or in connection therewith). No
Credit Party and, to Borrower's knowledge, no other Person a party thereto is in
default in the performance or compliance with any provisions thereof. Each
Acquisition Agreement complies with, and, upon the initial funding of the Loans,
the Acquisition will be consummated in accordance with, all applicable laws.
Each Acquisition Agreement is in full force and effect as of the Closing Date,
has not been terminated, rescinded or withdrawn. All requisite approvals by
Governmental Authorities having jurisdiction over any Credit Party and, to
Borrower's knowledge, other Persons referenced therein, with respect to the
transactions contemplated by the Acquisition Agreements, have been obtained, and
no such approvals impose any conditions to the consummation of the transactions
contemplated by the Acquisition Agreements or to the conduct by any Credit Party
of its business thereafter. To the best of Borrower's knowledge, none of either
Seller's representations or warranties in any Acquisition Agreement contain any
untrue statement of a material fact or omit any fact necessary to make the
statements therein not misleading. Each of the representations and warranties
given by each applicable Credit Party in the Acquisition Agreement is true and
correct in all material respects. Notwithstanding anything contained in any
Acquisition Agreement to the contrary, such representations and warranties of
the Credit Parties are incorporated into this Agreement by this Section 3.25 and
shall, solely for purposes of this Agreement and the benefit of Agent and
Lenders, survive the consummation of the Acquisition.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1. Reports and Notices.
(a) Borrower hereby agrees that from and after the Closing Date and until the
Termination Date, it shall deliver to Agent and/or Lenders, as required, the
Financial Statements, notices, Projections and other information at the times,
to the Persons and in the manner set forth in Annex E.
(b) Borrower hereby agrees that from and after the Closing Date and until the
Termination Date, it shall deliver to Agent and/or Lenders, as required, the
various Collateral Reports (including Borrowing Base Certificates in the form of
Exhibit 4.1(b)) at the times, to the Persons and in the manner set forth in
Annex F.
4.2. Communication with Accountants.
Borrower authorizes Agent and, so long as a Default or Event
of Default shall have occurred and be continuing, each Lender, to communicate
directly with its independent certified public accountants including Xxxxxx
Xxxxxxxx LLP, and authorizes and shall instruct those accountants and advisors
to disclose and make available to Agent and each Lender any and all Financial
Statements and other supporting financial documents, schedules and information
relating to any Credit Party (including copies of any issued management letters)
with respect to the business, financial condition and other affairs of any
Credit Party.
5. AFFIRMATIVE COVENANTS
Borrower agrees as to all Credit Parties that from and after
the date hereof and until the Termination Date:
5.1. Maintenance of Existence and Conduct of Business.
Each Credit Party shall do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and its rights and franchises; continue to conduct its business substantially as
now conducted or as otherwise permitted hereunder; at all times maintain,
preserve and protect all of its assets and properties used or useful in the
conduct of its business, and keep the same in good repair, working order and
condition in all material respects (taking into consideration ordinary wear and
tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices; and transact business only in such corporate and trade names
as are set forth in Disclosure Schedule (5.1).
5.2. Payment of Obligations.
(a) Subject to Section 5.2(b), each Credit Party shall pay and discharge or
cause to be paid and discharged promptly all Charges payable by it, including
(A) Charges imposed upon it, its income and profits, or any of its property
(real, personal or mixed) and all Charges with respect to tax, social security
and unemployment withholding with respect to its employees, and (B) lawful
claims for labor, materials, supplies and services or otherwise, before any
thereof shall become past due (provided, that claims under the license
agreements referred to in Section 8.1(n) shall not be considered Charges).
(b) Each Credit Party may in good faith contest, by appropriate proceedings, the
validity or amount of any Charges or claims described in Section 5.2(a);
provided, that (i) adequate reserves with respect to such contest are maintained
on the books of such Credit Party, in accordance with GAAP, (ii) no Lien shall
be imposed to secure payment of such Charges that is superior to any of the
Liens securing payment of the Obligations and such contest is maintained and
prosecuted continuously and with diligence and operates to suspend collection or
enforcement of such Charges, (iii) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest, (iv) such Credit Party shall
promptly pay or discharge such contested Charges or claims and all additional
charges, interest, penalties and expenses, if any, and shall deliver to Agent
evidence acceptable to Agent of such compliance, payment or discharge, if such
contest is terminated or discontinued adversely to such Credit Party or the
conditions set forth in this Section 5.2(b) are no longer met, and (v) Agent has
not advised Borrower in writing that Agent reasonably believes that nonpayment
or nondischarge thereof could have or result in a Material Adverse Effect.
5.3. Books and Records.
Each Credit Party shall keep adequate books and records with
respect to its business activities in which proper entries, reflecting all
financial transactions, are made in accordance with GAAP and on a basis
consistent with the Financial Statements attached as Disclosure Schedule
(3.4(A)).
5.4. Insurance; Damage to or Destruction of Collateral.
(a) The Credit Parties shall, at their sole cost and expense, maintain the
policies of insurance described on Disclosure Schedule (3.18) as in effect on
the date hereof or otherwise in form and amounts and with insurers acceptable to
Agent as may be required pursuant to (b) below. If any Credit Party at any time
or times hereafter shall fail to obtain or maintain any of the policies of
insurance required above or to pay all premiums relating thereto, Agent may at
any time or times thereafter obtain and maintain such policies of insurance and
pay such premiums and take any other action with respect thereto which Agent
deems advisable. Agent shall have no obligation to obtain insurance for any
Credit Party or pay any premiums therefor. By doing so, Agent shall not be
deemed to have waived any Default or Event of Default arising from any Credit
Party's failure to maintain such insurance or pay any premiums therefor. All
sums so disbursed, including attorneys' fees, court costs and other charges
related thereto, shall be payable on demand by Borrower to Agent and shall be
additional Obligations hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change in any Credit Party's
risk profile (including any change in the product mix maintained by any Credit
Party or any laws affecting the potential liability of such Credit Party) to
require additional forms and limits of insurance to, in Agent's reasonable
credit judgment, adequately protect both Agent's and Lender's interests in all
or any portion of the Collateral and to ensure that each Credit Party is
protected by insurance in amounts and with coverage customary for its industry.
If requested by Agent, each Credit Party shall deliver to Agent from time to
time a report of a reputable insurance broker, satisfactory to Agent, with
respect to its insurance policies.
(c) Borrower shall deliver to Agent, in form and substance satisfactory to
Agent, endorsements to (i) all "All Risk" and business interruption insurance
naming Agent, on behalf of itself and Lenders, as loss payee, and (ii) all
general liability and other liability policies naming Agent, on behalf of itself
and Lenders, as additional insured. Borrower irrevocably makes, constitutes and
appoints Agent (and all officers, employees or agents designated by Agent), so
long as any Default or Event of Default shall have occurred and be continuing or
the anticipated insurance proceeds exceed $2,000,000, as Borrower's true and
lawful agent and attorney-in-fact for the purpose of making, settling and
adjusting claims under such "All Risk" policies of insurance, endorsing the name
of Borrower on any check or other item of payment for the proceeds of such "All
Risk" policies of insurance and for making all determinations and decisions with
respect to such "All Risk" policies of insurance. Agent shall have no duty to
exercise any rights or powers granted to it pursuant to the foregoing power of
attorney. Borrower shall promptly notify Agent of any loss, damage, or
destruction to the Collateral in the amount of $250,000 or more, whether or not
covered by insurance. After deducting from such proceeds the expenses, if any,
incurred by Agent in the collection or handling thereof, Agent may, at its
option, apply such proceeds to the reduction of the Obligations in accordance
with Section 1.3(d), or permit or require Borrower to use such money, or any
part thereof, to replace, repair, restore or rebuild the Collateral in a
diligent and expeditious manner with materials and workmanship of substantially
the same quality as existed before the loss, damage or destruction.
Notwithstanding the foregoing, if the casualty giving rise to such insurance
proceeds would not reasonably be expected to have a Material Adverse Effect and
such insurance proceeds do not exceed $2,000,000 in the aggregate, Agent shall
permit Borrower to replace, restore, repair or rebuild the property; provided
that if Borrower has not completed or entered into binding agreements to
complete such replacement, restoration, repair or rebuilding within one hundred
eighty (180) days of such casualty, Agent may apply such insurance proceeds to
the Obligations in accordance with Section 1.3(d). All insurance proceeds which
are to be made available to Borrower to replace, repair, restore or rebuild the
Collateral shall be applied by Agent to reduce the outstanding principal balance
of the Revolving Loan (which application shall not result in a permanent
reduction of the Revolving Loan Commitment) and upon such application, Agent
shall establish a Reserve against the Borrowing Base in an amount equal to the
amount of such proceeds so applied. Thereafter, such funds shall be made
available to Borrower to provide funds to replace, repair, restore or rebuild
the Collateral as follows: (i) Borrower shall request a Revolving Credit Advance
be made to Borrower in the amount requested to be released; (ii) so long as the
conditions set forth in Section 2.2 have been met, Revolving Lenders shall make
such Revolving Credit Advance; and (iii) in the case of insurance proceeds
applied against the Revolving Loan, the Reserve established with respect to such
insurance proceeds shall be reduced by the amount of such Revolving Credit
Advance. To the extent not used to replace, repair, restore or rebuild the
Collateral, such insurance proceeds shall be applied in accordance with Section
1.3(d).
5.5. Compliance with Laws.
Each Credit Party shall comply with all federal, state, local
and foreign laws and regulations applicable to it, including those relating to
ERISA and labor matters and Environmental Laws and Environmental Permits, except
to the extent that the failure to comply, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
5.6. Supplemental Disclosure.
From time to time as may be requested by Agent (which request
will not be made more frequently than once each year absent the occurrence and
continuance of a Default or an Event of Default), the Credit Parties shall
supplement each Disclosure Schedule hereto, or any representation herein or in
any other Loan Document, with respect to any matter hereafter arising which, if
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in such Disclosure Schedule or as an exception to such
representation or which is necessary to correct any information in such
Disclosure Schedule or representation which has been rendered inaccurate thereby
(and, in the case of any supplements to any Disclosure Schedule, such Disclosure
Schedule shall be appropriately marked to show the changes made therein);
provided that (a) no such supplement to any such Disclosure Schedule or
representation shall be or be deemed a waiver of any Default or Event of Default
resulting from the matters disclosed therein, except as consented to by Agent
and Requisite Lenders in writing; and (b) no supplement shall be required as to
representations and warranties that relate solely to the Closing Date.
5.7. Intellectual Property.
Each Credit Party will conduct its business and affairs
without infringement of or interference with any Intellectual Property of any
other Person in any material respect.
5.8. Environmental Matters.
Each Credit Party shall and shall cause each Person within its
control to: (a) conduct its operations and keep and maintain its Real Estate in
compliance with all Environmental Laws and Environmental Permits other than
noncompliance which could not reasonably be expected to have a Material Adverse
Effect; (b) implement any and all investigation, remediation, removal and
response actions which are appropriate or necessary to maintain the value and
marketability of the Real Estate or to otherwise comply with Environmental Laws
and Environmental Permits pertaining to the presence, generation, treatment,
storage, use, disposal, transportation or Release of any Hazardous Material on,
at, in, under, above, to, from or about any of its Real Estate; (c) notify Agent
promptly after such Credit Party becomes aware of any violation of Environmental
Laws or Environmental Permits or any Release on, at, in, under, above, to, from
or about any Real Estate which is reasonably likely to result in Environmental
Liabilities in excess of $25,000; and (d) promptly forward to Agent a copy of
any order, notice, request for information or any communication or report
received by such Credit Party in connection with any such violation or Release
or any other matter relating to any Environmental Laws or Environmental Permits
that could reasonably be expected to result in Environmental Liabilities in
excess of $25,000, in each case whether or not the Environmental Protection
Agency or any Governmental Authority has taken or threatened any action in
connection with any such violation, Release or other matter. If Agent at any
time has a reasonable basis to believe that there may be a violation of any
Environmental Laws or Environmental Permits by any Credit Party or any
Environmental Liability arising thereunder, or a Release of Hazardous Materials
on, at, in, under, above, to, from or about any of its Real Estate, which, in
each case, could reasonably be expected to have a Material Adverse Effect, then
each Credit Party shall, upon Agent's written request (i) cause the performance
of such environmental audits including subsurface sampling of soil and
groundwater, and preparation of such environmental reports, at Borrower's
expense, as Agent may from time to time reasonably request, which shall be
conducted by reputable environmental consulting firms reasonably acceptable to
Agent and shall be in form and substance acceptable to Agent, and (ii) permit
Agent or its representatives to have access to all Real Estate for the purpose
of conducting such environmental audits and testing as Agent deems appropriate,
including subsurface sampling of soil and groundwater. Borrower shall reimburse
Agent for the costs of such audits and tests and the same will constitute a part
of the Obligations secured hereunder.
5.9. Landlords' Agreements, Mortgagee Agreements and Bailee Letters.
Each Credit Party shall obtain a landlord's agreement,
mortgagee agreement or bailee letter, as applicable, from the lessor of each
leased property or mortgagee of owned property or with respect to any warehouse,
processor or converter facility or other location where Collateral is located,
which agreement or letter shall contain a waiver or subordination of all Liens
or claims that the landlord, mortgagee or bailee may assert against the
Inventory or Collateral at that location, and shall otherwise be satisfactory in
form and substance to Agent. With respect to such locations or warehouse space
leased or owned as of the Closing Date and thereafter, if Agent has not received
a landlord or mortgagee agreement or bailee letter as of the Closing Date (or,
if later, as of the date such location is acquired or leased), and such
landlord, mortgagee or bailee has a contractual or statutory Lien, then
Borrower's Eligible Inventory at that location shall, in Agent's discretion, be
excluded from the Borrowing Base or be subject to such Reserves as may be
established by Agent in its reasonable credit judgment. After the Closing Date,
no real property or warehouse space shall be leased or acquired by any Credit
Party and no Inventory shall be shipped to a processor or converter under
arrangements established after the Closing Date without the prior written
consent of Agent (which consent, in Agent's discretion, may be conditioned upon
the exclusion from the Borrowing Base of Eligible Inventory at that location or
the establishment of Reserves acceptable to Agent if such landlord,
warehouseman, processor or converter has a contractual or statutory Lien) or,
unless and until a satisfactory landlord or mortgagee agreement or bailee
letter, as appropriate, shall first have been obtained with respect to such
location if such landlord, warehouseman, processor or converter has a
contractual or statutory Lien. Each Credit Party shall timely and fully pay and
perform its obligations under all leases and other agreements with respect to
each leased location or public warehouse where any Collateral is or may be
located.
5.10. Further Assurances.
Borrower agrees that it shall and shall cause each other
Credit Party to, at such Credit Party's expense and upon request of Agent, duly
execute and deliver, or cause to be duly executed and delivered, to Agent such
further instruments and do and cause to be done such further acts as may be
necessary or proper in the reasonable opinion of Agent to carry out more
effectively the provisions and purposes of this Agreement or any other Loan
Document.
5.11. Year 2000 Problems.
On or prior to January 31, 1999, each Credit Party shall
complete and deliver to Agent a Year 2000 Corrective Plan. On or prior to
September 30, 1999, each Credit Party shall implement Year 2000 Corrective
Actions. On or before October 31, 1999, each Credit Party shall complete Year
2000 Corrective Actions and Year 2000 Implementation Testing. On or before
November 30, 1999, each Credit Party shall eliminate all Year 2000 Problems,
except where the failure to correct the same could not reasonably be expected to
have a Material Adverse Effect, individually or in the aggregate.
5.12. Post-Closing Matters.
Within thirty (30) days following the Closing Date, (i)
Xxxxxxx Technologies, Inc. shall have been merged into Borrower in accordance
with applicable law, and Borrower shall provide to Agent satisfactory evidence
thereof, (ii) Borrower shall have delivered to Agent a landlord waiver, in form
and substance satisfactory to Agent, executed by the landlord of Borrower's
leased premises known as 000 Xxxxxxxxx Xxx, Xxxxxxx, Xxxxxxxxxx, and (iii) the
Canadian Subsidiary shall have caused its depository bank to deliver fully
executed cash management documents to Agent in form and substance satisfactory
to Agent.
6. NEGATIVE COVENANTS
Borrower agrees as to all Credit Parties that, without the
prior written consent of Agent and the Requisite Lenders, from and after the
date hereof until the Termination Date:
6.1. Mergers, Subsidiaries, Etc.
No Credit Party shall directly or indirectly, by operation of
law or otherwise, (a) form or acquire any Subsidiary, or (b) merge with,
consolidate with, acquire all or substantially all of the assets or capital
stock of, or otherwise combine with or acquire, any Person (except that a
domestic Subsidiary of Borrower may be merged into Borrower). Notwithstanding
the foregoing, Borrower may acquire all or substantially all of the assets or
capital Stock of any Person (the "Target") (in each case, a "Permitted
Acquisition") subject to the satisfaction of each of the following conditions:
(i) Agent shall receive at least fifteen (15) Business Days' prior written
notice of such proposed Permitted Acquisition, which notice shall
include a reasonably detailed description of such proposed Permitted
Acquisition;
(ii) such Permitted Acquisition shall only involve assets principally
located in the United States and/or Canada and comprising a business,
or those assets of a business, of the type engaged in by Borrower as of
the Closing Date, and which business would not subject Agent or any
Lender to regulatory or third party approvals in connection with the
exercise of its rights and remedies under this Agreement or any other
Loan Documents other than approvals applicable to the exercise of such
rights and remedies with respect to Borrower prior to such Permitted
Acquisition;
(iii) such Permitted Acquisition shall be consensual and shall have been
approved by the Target's board of directors;
(iv) no additional Indebtedness, Guaranteed Indebtedness, contingent
obligations or other liabilities shall be incurred, assumed or
otherwise be reflected on a consolidated balance sheet of Borrower and
Target after giving effect to such Permitted Acquisition, except (A)
Loans made hereunder and (B) ordinary course trade payables, accrued
expenses and unsecured Indebtedness of the Target to the extent no
Default or Event of Default shall have occurred and be continuing or
would result after giving effect to such Permitted Acquisition;
(v) the sum of all amounts payable in connection with all Permitted
Acquisitions (including all transaction costs and all Indebtedness,
liabilities and contingent obligations incurred or assumed in
connection therewith or otherwise reflected on a consolidated balance
sheet of Borrower and Target) shall not exceed $25,000,000 for such
Permitted Acquisitions during the term hereof;
(vi) the Target shall not have incurred an operating loss for the trailing
twelve month period preceding the date of the Permitted Acquisition, as
determined based upon the Target's Financial Statements for its most
recently completed fiscal year and its most recent interim financial
period completed within sixty (60) days prior to the date of
consummation of such Permitted Acquisition;
(vii) the business and assets acquired in such Permitted Acquisition shall be
free and clear of all Liens (other than Permitted Encumbrances);
(viii) at or prior to the closing of any Permitted Acquisition, Agent will be
granted a first priority perfected Lien (subject to Permitted
Encumbrances) in all assets acquired pursuant thereto or in the assets
and capital stock of the Target, and Borrower and the Target shall have
executed such documents and taken such actions as may be required by
Agent in connection therewith;
(ix) Concurrently with delivery of the notice referred to in clause (i)
above, Borrower shall have delivered to Agent, in form and substance
satisfactory to Agent:
(A) a pro forma consolidated balance sheet, income statement and
cash flow statement of Borrower and its Subsidiaries (the
"Acquisition Pro Forma"), based on recent financial
statements, which shall be complete and shall fairly present
in all material respects the assets, liabilities, financial
condition and results of operations of Borrower and its
Subsidiaries in accordance with GAAP consistently applied, but
taking into account such Permitted Acquisition and the funding
of all Loans in connection therewith, and such Acquisition Pro
Forma shall reflect that (x) average daily Net Borrowing
Availability for the 90-day period preceding the consummation
of such Permitted Acquisition would have exceeded $2,500,000
on a pro forma basis (giving effect to such Permitted
Acquisition and all Loans funded in connection therewith as if
made on the first day of such period) and the Acquisition
Projections (as hereinafter defined) shall reflect that such
Net Borrowing Availability of $2,500,000 shall continue for at
least ninety (90) days after the consummation of such
Permitted Acquisition, and (y) on a pro forma basis, no Event
of Default shall have occurred and be continuing or would
result after giving effect to such Permitted Acquisition and
Borrower would have been in compliance with the financial
covenants set forth in Annex G for the four quarter period
reflected in the Compliance Certificate most recently
delivered to Agent pursuant to Annex E prior to the
consummation of such Permitted Acquisition (giving effect to
such Permitted Acquisition and all Loans funded in connection
therewith as if made on the first day of such period);
(B) updated versions of the most recently delivered Projections
covering the one (1) year period commencing on the date of
such Permitted Acquisition and otherwise prepared in
accordance with the Projections (the "Acquisition
Projections") and based upon historical financial data of a
recent date satisfactory to Agent, taking into account such
Permitted Acquisition; and
(C) a certificate of the chief financial officer of Borrower to
the effect that: (w) Borrower will be Solvent upon the
consummation of the Permitted Acquisition; (x) the Acquisition
Pro Forma fairly presents the financial condition of Borrower
(on a consolidated basis) as of the date thereof after giving
effect to the Permitted Acquisition; (y) the Acquisition
Projections are reasonable estimates of the future financial
performance of Borrower subsequent to the date thereof based
upon the historical performance of Borrower and the Target and
show that Borrower shall continue to be in compliance with the
financial covenants set forth in Annex G for the three (3)
year period thereafter (or, if less, the remaining term of
this Agreement); and (z) Borrower has completed its due
diligence investigation with respect to the Target and such
Permitted Acquisition, which investigation was conducted in a
manner similar to that which would have been conducted by a
prudent purchaser of a comparable business and the results of
which investigation were delivered to Agent and Lenders;
(x) on or prior to the date of such Permitted Acquisition, Agent shall have
received, in form and substance satisfactory to Agent, copies of the
acquisition agreement and related agreements and instruments, and all
opinions, certificates, lien search results and other documents
reasonably requested by Agent; and
(xi) at the time of such Permitted Acquisition and after giving effect
thereto, no Default or Event of Default shall have occurred and be
continuing.
Notwithstanding the foregoing, the Accounts and Inventory of
the Target shall not be included in Eligible Accounts and Eligible Inventory
without the prior written consent of Agent and Requisite Revolving Lenders.
6.2. Investments; Loans and Advances.
Except as otherwise expressly permitted by this Section 6, no
Credit Party shall make or permit to exist any investment in, or make, accrue or
permit to exist loans or advances of money to, any Person, through the direct or
indirect lending of money, holding of securities or otherwise, except that (a)
Borrower may hold investments comprised of notes payable, or stock or other
securities issued by Account Debtors to Borrower pursuant to negotiated
agreements with respect to settlement of such Account Debtor's Accounts in the
ordinary course of business, so long as the aggregate amount of such Accounts so
settled by Borrower does not exceed $100,000; (b) each Credit Party may maintain
its existing investments in its Subsidiaries as of the Closing Date; (c) so long
as no Default or Event of Default shall have occurred and be continuing and
there is no outstanding Revolving Loan balance, (1) Borrower may make
investments, subject to Control Letters in favor of Agent for the benefit of
Lenders or otherwise subject to a perfected security interest in favor of Agent
for the benefit of Lenders, in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within one (1) year from the date of acquisition thereof, (ii)
commercial paper maturing no more than one (1) year from the date of creation
thereof and currently having the highest rating obtainable from either Standard
& Poor's Ratings Group or Xxxxx'x Investors Service, Inc., (iii) certificates of
deposit, maturing no more than one (1) year from the date of creation thereof,
issued by commercial banks incorporated under the laws of the United States of
America, each having combined capital, surplus and undivided profits of not less
than $300,000,000 and having a senior unsecured rating of "A" or better by a
nationally recognized rating agency (an "A Rated Bank"), (iv) time deposits,
maturing no more than thirty (30) days from the date of creation thereof with A
Rated Banks and (v) mutual funds that invest solely in one or more of the
investments described in clauses (i) through (iv) above, (2) the Irish
Subsidiary and Irish Indirect Subsidiary may make investments in (i) any
instrument issued by or on behalf of the National Treasury Management Agency or
the Minister for Finance in relation to a function exercised by him which is
capable of being delegated to the said Agency under section 5 of the National
Treasury Management Agency Act, 1990, (ii) commercial paper maturing no more
than one (1) year from the date of creation thereof and currently having the
highest rating obtainable from either Standard & Poor's Ratings Group or Xxxxx'x
Investors Services, Inc., (iii) certificates of deposit maturing no more than
one (1) year from the date of creation thereof, issued by the holder of a
license for the time being in force under section 9 of the Central Bank Act,
1971 or a body authorized to carry on the activities of acceptance of deposits
and lending under the European Communities (Licensing and Supervision of Credit
Institutions) Regulations, 1992 each having combined capital, surplus and
undivided profits of not less than $300,000,000 and having a senior unsecured
rating A or better by either Standard & Poor's Ratings Group or Xxxxx'x
Investors Services, Inc. (an "A Rated Bank"), (iv) time deposits, maturing no
more than thirty (30) days from the date of creation thereof with A Rated Banks,
and (v) collective investment schemes that invest solely in one or more of the
investments described in clauses (i) to (iv) above, and (3) the Canadian
Subsidiary may make investments to the extent permitted under the Canadian
Credit Agreement; (d) Borrower may make intercompany loans to the Irish
Subsidiary and the Canadian LLC pursuant to the terms of Section 6.3(a)(v); (e)
the Irish Subsidiary may make intercompany loans to the Irish Indirect
Subsidiary pursuant to the terms of Section 6.3(a)(vii); and (f) the Canadian
LLC may make intercompany loans to the Canadian Subsidiary pursuant to the terms
of Section 6.3(a)(viii).
6.3. Indebtedness.
(a) No Credit Party shall create, incur, assume or permit to exist any
Indebtedness, except (without duplication) (i) Indebtedness secured by purchase
money security interests and Capitalized Leases permitted in clause (c) of
Section 6.7, (ii) the Loans and the other Obligations, (iii) unfunded pension
fund and other employee benefit plan obligations and liabilities to the extent
they are permitted to remain unfunded under applicable law, (iv) existing
Indebtedness described in Disclosure Schedule (6.3) and refinancings thereof or
amendments or modifications thereof which do not have the effect of increasing
the principal amount thereof or changing the amortization thereof (other than to
extend the same) and which are otherwise on terms and conditions no less
favorable to any Credit Party, Agent or any Lender, as determined by Agent, than
the terms of the Indebtedness being refinanced, amended or modified, (v)
Indebtedness consisting of intercompany loans and advances made by Borrower to
the Canadian LLC and the Irish Subsidiary; provided that (A) such Subsidiary
shall have executed and delivered to Borrower, on the Closing Date, a note (the
"Intercompany Note") to evidence any such intercompany Indebtedness owing at any
time by such Subsidiary to Borrower, which Intercompany Note shall be in form
and substance satisfactory to Agent and shall be pledged and delivered to Agent
pursuant to the Borrower Pledge Agreement as additional collateral security for
the Obligations; (B) Borrower shall record all intercompany transactions on its
books and records in a manner satisfactory to Agent; (C) at the time any such
intercompany loan or advance is made by Borrower and after giving effect
thereto, Borrower shall be Solvent; (D) no Default or Event of Default would
occur and be continuing after giving effect to any such proposed intercompany
loan; (E) in the case of any such intercompany loans made by Borrower, Borrower
shall have Net Borrowing Availability of not less than $5,000,000 after giving
effect to such intercompany loan; and (F) the aggregate balance of all such
intercompany loans owing to Borrower by the Canadian LLC shall not exceed
$7,500,000 at any time and the aggregate balance of all such intercompany loans
owing to Borrower by the Irish Subsidiary shall not exceed $15,000,000 at any
time, (vi) Indebtedness owing by the Irish Subsidiary and/or the Irish Indirect
Subsidiary so long as after giving effect to the incurrence of such
Indebtedness, the ratio of the Funded Debt to EBITDA (for the most recently
ended twelve (12) month period) for the Irish Subsidiary and the Irish Indirect
Subsidiary, on a consolidated basis, is not in excess of 4.00 : 1.00, (vii)
Indebtedness consisting of intercompany loans and advances made by the Irish
Subsidiary to the Irish Indirect Subsidiary, and (viii) Indebtedness consisting
of intercompany loans and advances made by the Canadian LLC to the Canadian
Subsidiary so long as the Canadian Subsidiary shall have executed and delivered
to the Canadian LLC, on the Closing Date, an Intercompany Note to evidence such
intercompany Indebtedness owing at any time by the Canadian Subsidiary to the
Canadian LLC, which Intercompany Note shall be in form and substance
satisfactory to Agent and shall be pledged and delivered to Agent as additional
collateral security for the guaranty executed by the Canadian LLC to Agent.
(b) No Credit Party shall, directly or indirectly, voluntarily purchase, redeem,
defease or prepay any principal of, premium, if any, interest or other amount
payable in respect of any Indebtedness, other than (i) the Obligations, (ii)
Indebtedness to Marquette Capital Bank, N.A. so long as after giving effect to
such repayment, Borrower shall have Net Borrowing Availability of not less than
$5,000,000, and (iii) Indebtedness secured by a Permitted Encumbrance if the
asset securing such Indebtedness has been sold or otherwise disposed of in
accordance with Sections 6.8(c) or (d).
6.4. Employee Loans and Affiliate Transactions.
(a) No Credit Party shall enter into or be a party to any transaction with any
other Credit Party or any Affiliate thereof except in the ordinary course of and
pursuant to the reasonable requirements of such Credit Party's business and upon
fair and reasonable terms that are no less favorable to such Credit Party than
would be obtained in a comparable arm's length transaction with a Person not an
Affiliate of such Credit Party. In addition, if any such transaction or series
of related transactions involves payments in excess of $50,000 in the aggregate,
the terms of these transactions must be disclosed in advance to Agent and
Lenders. All such transactions existing as of the date hereof are described on
Disclosure Schedule (6.4(a)).
(b) No Credit Party shall enter into any lending or borrowing transaction with
any employees of any Credit Party, except loans to their respective employees on
an arm's-length basis in the ordinary course of business consistent with past
practices for travel expenses, relocation costs and similar purposes up to a
maximum of $25,000 to any employee and up to a maximum of $100,000 in the
aggregate at any one time outstanding.
6.5. Capital Structure and Business.
No Credit Party shall (a) make any changes in any of its
business objectives, purposes or operations which could in any way adversely
affect the repayment of the Loans or any of the other Obligations or could
reasonably be expected to have or result in a Material Adverse Effect, (b)
except for Borrower, make any change in its capital structure as described on
Disclosure Schedule (3.8), including the issuance of any shares of Stock,
warrants or other securities convertible into Stock or any revision of the terms
of its outstanding Stock, or (c) amend its charter or bylaws in a manner which
would adversely affect Agent or Lenders or such Credit Party's duty or ability
to repay the Obligations. No Credit Party shall engage in any business other
than the businesses currently engaged in by it or businesses reasonably related
thereto.
6.6. Guaranteed Indebtedness.
No Credit Party shall create, incur, assume or permit to exist
any Guaranteed Indebtedness except (a) by endorsement of instruments or items of
payment for deposit to the general account of any Credit Party, and (b) for
Guaranteed Indebtedness incurred for the benefit of any other Credit Party if
the primary obligation is expressly permitted by this Agreement.
6.7. Liens.
No Credit Party shall create, incur, assume or permit to exist
any Lien on or with respect to its Accounts or any of its other properties or
assets (whether now owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and summarized on
Disclosure Schedule (6.7); (c) Liens created after the date hereof by
conditional sale or other title retention agreements (including Capital Leases)
or in connection with purchase money Indebtedness with respect to Equipment and
Fixtures acquired by any Credit Party in the ordinary course of business,
involving the incurrence of an aggregate amount of purchase money Indebtedness
and Capital Lease Obligations of not more than $10,000,000 outstanding at any
one time for all such Liens (provided that such Liens attach only to the assets
subject to such purchase money debt and such Indebtedness is incurred within
twenty (20) days following such purchase and does not exceed one hundred percent
(100%) of the purchase price of the subject assets); (d) Liens on the assets of
the Canadian Subsidiary to the extent permitted under the Canadian Credit
Agreement; and (e) Liens on the assets of the Irish Subsidiary and Irish
Indirect Subsidiary to secure Indebtedness permitted under Section 6.3(a)(vi).
In addition, no Credit Party shall become a party to any agreement, note,
indenture or instrument, or take any other action, which would prohibit the
creation of a Lien on any of its properties or other assets in favor of Agent,
on behalf of itself and Lenders, as additional collateral for the Obligations,
except operating leases, Capital Leases or Licenses which prohibit Liens upon
the assets that are subject thereto.
6.8. Sale of Stock and Assets.
No Credit Party shall sell, transfer, convey, assign or
otherwise dispose of any of its properties or other assets, including the
capital Stock of any of its Subsidiaries (whether in a public or a private
offering or otherwise) or any of their Accounts, other than (a) the sale of
Inventory in the ordinary course of business, (b) any sale of any Stock of
Chumbo Holdings Corporation, and (c) the sale, transfer, conveyance or other
disposition by a Credit Party of Equipment, Fixtures or Real Estate that are
obsolete or no longer used or useful in such Credit Party's business and having
a value not exceeding $100,000 in any single transaction or $500,000 in the
aggregate in any Fiscal Year and (d) other Equipment and Fixtures having a value
not exceeding $100,000 in any single transaction or $500,000 in the aggregate in
any Fiscal Year. With respect to any disposition of assets or other properties
permitted pursuant to clause(c) and clause (d) above, Agent agrees on reasonable
prior written notice to release its Lien on such assets or other properties in
order to permit the applicable Credit Party to effect such disposition and shall
execute and deliver to Borrower, at Borrower's expense, appropriate UCC-3
termination statements and other releases as reasonably requested by Borrower.
6.9. ERISA.
No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur an event which could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.
6.10. Financial Covenants.
Borrower shall not breach or fail to comply with any of the
Financial Covenants (the "Financial Covenants") set forth in Annex G.
Notwithstanding anything to the contrary herein, any and all financial results
arising from or generated by Chumbo Holdings Corporation will be excluded from
all financial calculations and financial covenants herein.
6.11. Hazardous Materials.
No Credit Party shall cause or permit a Release of any
Hazardous Material on, at, in, under, above, to, from or about any of the Real
Estate where such Release would (a) violate in any respect, or form the basis
for any Environmental Liabilities under, any Environmental Laws or Environmental
Permits or (b) otherwise adversely impact the value or marketability of any of
the Real Estate or any of the Collateral, other than such violations or
Environmental Liabilities which could not reasonably be expected to have a
Material Adverse Effect.
6.12. Sale-Leasebacks.
No Credit Party shall engage in any sale-leaseback, synthetic
lease or similar transaction involving any of its assets, except that the
Canadian Subsidiary may engage in a sale-leaseback of its premises so long as
the landlord of such premises executes and delivers to Canadian Agent a landlord
waiver in form and substance satisfactory to Canadian Agent.
6.13. Cancellation of Indebtedness.
No Credit Party shall cancel any claim or debt owing to it,
except for reasonable consideration negotiated on an arm's-length basis and in
the ordinary course of its business consistent with past practices.
6.14. Restricted Payments.
No Credit Party shall make any Restricted Payment, except (a)
intercompany loans and advances to the extent permitted by Section 6.3 above,
(b) dividends and distributions by Subsidiaries of Borrower paid to Borrower,
and (c) employee loans permitted under Section 6.4(b) above.
6.15. Change of Corporate Name or Location; Change of Fiscal Year.
No Credit Party shall (a) change its corporate name, or (b)
change its chief executive office, principal place of business, corporate
offices or warehouses or locations at which Collateral is held or stored, or the
location of its records concerning the Collateral, in any case without at least
thirty (30) days prior written notice to Agent and after Agent's written
acknowledgment that any reasonable action requested by Agent in connection
therewith, including to continue the perfection of any Liens in favor of Agent,
on behalf of Lenders, in any Collateral, has been completed or taken, and
provided that any such new location shall be in the continental United States;
provided, that the Irish Indirect Subsidiary may change its name to Zomax
Limited so long as Borrower provides Agent with written notice thereof within
five (5) days after such name change becomes effective. Without limiting the
foregoing, no Credit Party shall change its name, identity or corporate
structure in any manner which might make any financing or continuation statement
filed in connection herewith seriously misleading within the meaning of Section
9-402(7) of the Code or any other then applicable provision of the Code except
upon prior written notice to Agent and Lenders and after Agent's written
acknowledgment that any reasonable action requested by Agent in connection
therewith, including to continue the perfection of any Liens in favor of Agent,
on behalf of Lenders, in any Collateral, has been completed or taken. No Credit
Party shall change its Fiscal Year.
6.16. No Impairment of Intercompany Transfers.
No Credit Party shall directly or indirectly enter into or
become bound by any agreement, instrument, indenture or other obligation (other
than this Agreement and the other Loan Documents) which could directly or
indirectly restrict, prohibit or require the consent of any Person with respect
to the payment of dividends or distributions or the making or repayment of
intercompany loans by a Subsidiary of Borrower to Borrower.
6.17. No Speculative Transactions.
No Credit Party shall engage in any transaction involving
commodity options, futures contracts or similar transactions, except solely to
hedge against fluctuations in the prices of commodities owned or purchased by it
and the values of foreign currencies receivable or payable by it and interest
swaps, caps or collars.
6.18. Leases.
No Credit Party shall enter into any operating lease for
Equipment or Real Estate, if the aggregate of all such operating lease payments
payable in any year for Borrower and its Subsidiaries on a consolidated basis
would exceed $10,000,000.
7. TERM
7.1. Termination.
The financing arrangements contemplated hereby shall be in
effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.
7.2. Survival of Obligations Upon Termination of Financing Arrangements.
Except as otherwise expressly provided for in the Loan
Documents, no termination or cancellation (regardless of cause or procedure) of
any financing arrangement under this Agreement shall in any way affect or impair
the obligations, duties and liabilities of the Credit Parties or the rights of
Agent and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of Agent
and each Lender, all as contained in the Loan Documents, shall not terminate or
expire, but rather shall survive any such termination or cancellation and shall
continue in full force and effect until the Termination Date; provided however,
that in all events the provisions of Section 11, the payment obligations under
Sections 1.15 and 1.16, and the indemnities contained in the Loan Documents
shall survive the Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1. Events of Default.
The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an "Event of Default"
hereunder:
(a) Borrower (i) fails to make any payment of principal of, or interest on, or
Fees owing in respect of, the Loans or any of the other Obligations when due and
payable, or (ii) fails to pay or reimburse Agent or Lenders for any expense
reimbursable hereunder or under any other Loan Document within ten (10) days
following Agent's demand for such reimbursement or payment of expenses.
(b) Any Credit Party shall fail or neglect to perform, keep or observe any of
the provisions of Sections 1.4, 1.8, 5.4 or 6, or any of the provisions set
forth in Annexes C or G, respectively.
(c) Borrower shall fail or neglect to perform, keep or observe any of the
provisions of Section 4 or any provisions set forth in Annexes E or F,
respectively, and the same shall remain unremedied for three (3) days or more.
(d) Any Credit Party shall fail or neglect to perform, keep or observe any other
provision of this Agreement or of any of the other Loan Documents (other than
any provision embodied in or covered by any other clause of this Section 8.1)
and the same shall remain unremedied for thirty (30) days or more.
(e) A default or breach shall occur under any other agreement, document or
instrument to which any Credit Party is a party which is not cured within any
applicable grace period, and such default or breach (i) involves the failure to
make any payment when due in respect of any Indebtedness (other than the
Obligations) of any Credit Party in excess of $250,000 in the aggregate, or (ii)
causes, or permits any holder of such Indebtedness or a trustee to cause,
Indebtedness or a portion thereof in excess of $250,000 in the aggregate to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment, regardless of whether such default is waived, or such right is
exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base Certificate is untrue or
incorrect in any respect, or any representation or warranty herein or in any
Loan Document or in any written statement, report, financial statement or
certificate (other than a Borrowing Base Certificate) made or delivered to Agent
or any Lender by any Credit Party is untrue or incorrect in any material respect
as of the date when made or deemed made.
(g) Assets of any Credit Party with a fair market value of $250,000 or more
shall be attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors of any Credit Party and such condition
continues for thirty (30) days or more.
(h) A case or proceeding shall have been commenced against any Credit Party
seeking a decree or order in respect of any Credit Party (i) under Title 11 of
the United States Code, as now constituted or hereafter amended or any other
applicable federal, state or foreign bankruptcy or other similar law, (ii)
appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator
(or similar official) for any Credit Party or of any substantial part of any
such Person's assets, or (iii) ordering the winding-up or liquidation of the
affairs of any Credit Party, and such case or proceeding shall remain
undismissed or unstayed for sixty (60) days or more or such court shall enter a
decree or order granting the relief sought in such case or proceeding.
(i) Any Credit Party (i) shall file a petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
applicable federal, state or foreign bankruptcy or other similar law, (ii) shall
fail to contest in a timely and appropriate manner or shall consent to the
institution of proceedings thereunder or to the filing of any such petition or
to the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of any Credit Party or
of any substantial part of any such Person's assets, (iii) shall make an
assignment for the benefit of creditors, or (iv) shall take any corporate action
in furtherance of any of the foregoing, or (v) shall admit in writing its
inability to, or shall be generally unable to, pay its debts as such debts
become due.
(j) A final judgment or judgments for the payment of money in excess of $250,000
in the aggregate at any time outstanding shall be rendered against any Credit
Party and the same shall not, within thirty (30) days after the entry thereof,
have been discharged or execution thereof stayed or bonded pending appeal, or
shall not have been discharged prior to the expiration of any such stay.
(k) Any material provision of any Loan Document shall for any reason cease to be
valid, binding and enforceable in accordance with its terms (or any Credit Party
shall challenge the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction based on any such assertion, that
any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any security
interest created under any Loan Document shall cease to be a valid and perfected
first priority security interest or Lien (except as otherwise permitted herein
or therein) in any of the Collateral purported to be covered thereby.
(l) Any Change of Control shall occur.
(m) Any event shall occur, whether or not insured or insurable, as a result of
which revenue-producing activities cease or are substantially curtailed at any
facility of Borrower generating more than thirty percent (30%) of Borrower's
revenues for the Fiscal Year preceding such event and such cessation or
curtailment continues for more than sixty (60) days.
(n) Any default or breach by Borrower shall occur and be continuing under any of
the following agreements or any of the following agreements shall be terminated
for any reason: the Comprehensive CD Disc License Agreement, dated January 1,
1996, between U.S. Philips Corporation and Borrower or the Non-Exclusive Patent
License Agreement for Disc Products, dated January 1, 1994, between Discovision
Associates and Borrower, to the extent as a result of such default or breach,
Borrower receives written notice that such license is to be terminated.
(o) An "Event of Default" as defined in the Canadian Credit Agreement shall
occur.
8.2. Remedies.
(a) If any Default or Event of Default shall have occurred and be continuing,
Agent may (and at the written request of Requisite Revolving Lenders, shall),
without notice, suspend the Revolving Loan facility with respect to further
Advances and/or the incurrence of further Letter of Credit Obligations whereupon
any further Advances and the incurrence of further Letter of Credit Obligations
shall be made or extended in Agent's sole discretion (or in the sole discretion
of the Requisite Revolving Lenders, if such suspension occurred at their
direction) so long as such Default or Event of Default is continuing. If any
Default or Event of Default shall have occurred and be continuing, Agent may
(and at the written request of Requisite Lenders shall), without notice except
as otherwise expressly provided herein, increase the rate of interest applicable
to the Loans and the Letter of Credit Fees to the Default Rate.
(b) If any Event of Default shall have occurred and be continuing, Agent may
(and at the written request of the Requisite Lenders shall), without notice, (i)
terminate the Revolving Loan facility with respect to further Advances or the
incurrence of further Letter of Credit Obligations; (ii) declare all or any
portion of the Obligations, including all or any portion of any Loan to be
forthwith due and payable, and require that the Letter of Credit Obligations be
cash collateralized as provided in Annex B, all without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by
Borrower and each other Credit Party; and (iii) exercise any rights and remedies
provided to Agent under the Loan Documents and/or at law or equity, including
all remedies provided under the Code; provided, however, that upon the
occurrence of an Event of Default specified in Sections 8.1(g), (h) or (i), the
Revolving Loan facility shall be immediately terminated and all of the
Obligations, including the Revolving Loan, shall become immediately due and
payable without declaration, notice or demand by any Person.
8.3. Waivers by Borrower.
Except as otherwise provided for in this Agreement or by
applicable law, Borrower waives: (a) presentment, demand and protest and notice
of presentment, dishonor, notice of intent to accelerate, notice of
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Agent on which any Credit Party may in any way be liable, and
hereby ratifies and confirms whatever Agent may do in this regard, (b) all
rights to notice and a hearing prior to Agent's taking possession or control of,
or to Agent's replevy, attachment or levy upon, the Collateral or any bond or
security which might be required by any court prior to allowing Agent to
exercise any of its remedies, and (c) the benefit of all valuation, appraisal,
marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1. Assignment and Participations.
(a) Borrower consents to any Lender's assignment of, and/or sale of
participations in, at any time or times, the Loan Documents, Loans, Letter of
Credit Obligations and any Commitment or of any portion thereof or interest
therein, including any Lender's rights, title, interests, remedies, powers or
duties thereunder, whether evidenced by a writing or not. Any assignment by a
Lender shall (i) require the consent of Agent and, so long as no Default or
Event of Default has occurred and is continuing, Borrower (which shall not be
unreasonably withheld or delayed) and the execution of an assignment agreement
(an "Assignment Agreement" substantially in the form attached hereto as Exhibit
9.1(a) and otherwise in form and substance satisfactory to, and acknowledged by,
Agent; (ii) be conditioned on such assignee Lender representing to the assigning
Lender and Agent that it is purchasing the applicable Loans to be assigned to it
for its own account, for investment purposes and not with a view to the
distribution thereof; (iii) if a partial assignment, be in an amount at least
equal to $5,000,000 and, after giving effect to any such partial assignment, the
assigning Lender shall have retained Commitments in an amount at least equal to
$5,000,000; (iv) be conditioned on the percentage assigned equaling the
percentage of the Commitment (as defined in the Canadian Credit Agreement)
assigned by the assigning Lender (or its Affiliates) under the Canadian Credit
Agreement unless Agent otherwise consents to a different percentage; and (v)
include a payment to Agent of an assignment fee of $3,500. In the case of an
assignment by a Lender under this Section 9.1, the assignee shall have, to the
extent of such assignment, the same rights, benefits and obligations as it would
if it were a Lender hereunder. The assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitments or assigned portion
thereof from and after the date of such assignment. Borrower hereby acknowledges
and agrees that any assignment will give rise to a direct obligation of Borrower
to the assignee and that the assignee shall be considered to be a "Lender". In
all instances, each Lender's liability to make Loans hereunder shall be several
and not joint and shall be limited to such Lender's Pro Rata Share of the
applicable Commitment. In the event Agent or any Lender assigns or otherwise
transfers all or any part of the Obligations, Agent or any such Lender shall so
notify Borrower and Borrower shall, upon the request of Agent or such Lender,
execute new Notes in exchange for the Notes, if any, being assigned.
Notwithstanding the foregoing provisions of this Section 9.1(a), any Lender may
at any time pledge the Obligations held by it and such Lender's rights under
this Agreement and the other Loan Documents to a Federal Reserve Bank, and any
lender that is an investment fund may assign the Obligations held by it and such
Lender's rights under this Agreement and the other Loan Documents to another
investment fund managed by the same investment advisor; provided, however, that
no such pledge to a Federal Reserve Bank shall release such Lender from such
Lender's obligations hereunder or under any other Loan Document.
(b) Any participation by a Lender of all or any part of its Commitments shall be
made with the understanding that all amounts payable by Borrower hereunder shall
be determined as if that Lender had not sold such participation, and that the
holder of any such participation shall not be entitled to require such Lender to
take or omit to take any action hereunder except actions directly affecting (i)
any reduction in the principal amount of, or interest rate or Fees payable with
respect to, any Loan in which such holder participates, (ii) any extension of
the scheduled amortization of the principal amount of any Loan in which such
holder participates or the final maturity date thereof, and (iii) any release of
all or substantially all of the Collateral (other than in accordance with the
terms of this Agreement, the Collateral Documents or the other Loan Documents).
Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8, Borrower acknowledges
and agrees that a participation shall give rise to a direct obligation of
Borrower to the participant and the participant shall be considered to be a
"Lender". Except as set forth in the preceding sentence neither Borrower nor any
other Credit Party shall have any obligation or duty to any participant. Neither
Agent nor any Lender (other than the Lender selling a participation) shall have
any duty to any participant and may continue to deal solely with the Lender
selling a participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no Lender shall, as
between Borrower and that Lender, or Agent and that Lender, be relieved of any
of its obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans,
the Notes or other Obligations owed to such Lender.
(d) Borrower shall assist any Lender permitted to sell assignments or
participations under this Section 9.1 as reasonably required to enable the
assigning or selling Lender to effect any such assignment or participation,
including the execution and delivery of any and all agreements, notes and other
documents and instruments as shall be requested and the preparation of
informational materials for, and the participation of management in meetings
with, potential assignees or participants. Borrower shall certify the
correctness, completeness and accuracy of all descriptions of the Credit Parties
and their affairs contained in any selling materials provided by it and all
other information provided by it and included in such materials, except that any
Projections delivered by Borrower shall only be certified by Borrower as having
been prepared by Borrower in compliance with the representations contained in
Section 3.4(c).
(e) A Lender may furnish any information concerning Credit Parties in the
possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants). Each Lender shall obtain
from assignees or participants confidentiality covenants substantially
equivalent to those contained in Section 11.8.
9.2. Appointment of Agent.
GE Capital is hereby appointed to act on behalf of all Lenders
as Agent under this Agreement and the other Loan Documents. The provisions of
this Section 9.2 are solely for the benefit of Agent and Lenders and no Credit
Party nor any other Person shall have any rights as a third party beneficiary of
any of the provisions hereof. In performing its functions and duties under this
Agreement and the other Loan Documents, Agent shall act solely as an agent of
Lenders and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for any Credit
Party or any other Person. Agent shall have no duties or responsibilities except
for those expressly set forth in this Agreement and the other Loan Documents.
The duties of Agent shall be mechanical and administrative in nature and Agent
shall not have, or be deemed to have, by reason of this Agreement, any other
Loan Document or otherwise a fiduciary relationship in respect of any Lender.
Neither Agent nor any of its Affiliates nor any of their respective officers,
directors, employees, agents or representatives shall be liable to any Lender
for any action taken or omitted to be taken by it hereunder or under any other
Loan Document, or in connection herewith or therewith, except for damages caused
by its or their own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders,
Requisite Revolving Lenders, Supermajority Revolving Lenders or all affected
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any other Loan Document, then Agent shall be
entitled to refrain from such act or taking such action unless and until Agent
shall have received instructions from Requisite Lenders, Requisite Revolving
Lenders, Supermajority Revolving Lenders, or all affected Lenders, as the case
may be, and Agent shall not incur liability to any Person by reason of so
refraining. Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Loan Document (a) if such action would, in
the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of Agent, expose
Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder or under any other Loan Document in accordance with the instructions
of Requisite Lenders, Requisite Revolving Lenders, Supermajority Revolving
Lenders or all affected Lenders, as applicable.
9.3. Agent's Reliance, Etc.
Neither Agent nor any of its Affiliates nor any of their
respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement or the other Loan Documents, except for damages caused by its or
their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to Agent; (b) may consult
with legal counsel, independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations made
in or in connection with this Agreement or the other Loan Documents; (d) shall
not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of this Agreement or the other Loan
Documents on the part of any Credit Party or to inspect the Collateral
(including the books and records) of any Credit Party; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Loan Documents or any other instrument or document furnished pursuant hereto or
thereto; and (f) shall incur no liability under or in respect of this Agreement
or the other Loan Documents by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopy, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
9.4. GE Capital and Affiliates.
With respect to its Commitments hereunder, GE Capital shall
have the same rights and powers under this Agreement and the other Loan
Documents as any other Lender and may exercise the same as though it were not
Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include GE Capital in its individual capacity. GE Capital and its
Affiliates may lend money to, invest in, and generally engage in any kind of
business with, any Credit Party, any of their Affiliates and any Person who may
do business with or own securities of any Credit Party or any such Affiliate,
all as if GE Capital were not Agent and without any duty to account therefor to
Lenders. GE Capital and its Affiliates may accept fees and other consideration
from any Credit Party for services in connection with this Agreement or
otherwise without having to account for the same to Lenders. Each Lender
acknowledges the potential conflict of interest between GE Capital as a Lender
holding disproportionate interests in the Loans and GE Capital as Agent.
9.5. Lender Credit Decision.
Each Lender acknowledges that it has, independently and
without reliance upon Agent or any other Lender and based on the Financial
Statements referred to in Section 3.4(a) and such other documents and
information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
9.6. Indemnification.
Lenders agree to indemnify Agent (to the extent not reimbursed
by Credit Parties and without limiting the obligations of Borrower hereunder),
ratably according to their respective Pro Rata Shares, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against Agent in any way relating to
or arising out of this Agreement or any other Loan Document or any action taken
or omitted by Agent in connection therewith; provided, however, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent's gross negligence or willful misconduct. Without limiting
the foregoing, each Lender agrees to reimburse Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including counsel fees)
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 and each other Loan Document,
to the extent that Agent is not reimbursed for such expenses by Credit Parties.
9.7. Successor Agent.
Agent may resign at any time by giving not less than thirty
(30) days' prior written notice thereof to Lenders and Borrower, and if the
Commitment of GE Capital plus the "Commitment" (as defined in the Canadian
Credit Agreement) of General Electric Capital Canada, Inc. is less than
$20,000,000 as to Borrower and the Canadian Subsidiary at any time, GE Capital
will, at the written request of Borrower, resign as Agent. Upon any such
resignation, the Requisite Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Requisite
Lenders and shall have accepted such appointment within thirty (30) days after
the resigning Agent's giving notice of resignation, then the resigning Agent
may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender,
if a Lender is willing to accept such appointment, or otherwise shall be a
commercial bank or financial institution or a subsidiary of a commercial bank or
financial institution if such commercial bank or financial institution is
organized under the laws of the United States of America or of any State thereof
and has a combined capital and surplus of at least $300,000,000. If no successor
Agent has been appointed pursuant to the foregoing, by the 30th day after the
date such notice of resignation was given by the resigning Agent, such
resignation shall become effective and the Requisite Lenders shall thereafter
perform all the duties of Agent hereunder until such time, if any, as the
Requisite Lenders appoint a successor Agent as provided above. Any successor
Agent appointed by Requisite Lenders hereunder shall be subject to the approval
of Borrower, such approval not to be unreasonably withheld or delayed; provided
that such approval shall not be required if a Default or an Event of Default
shall have occurred and be continuing. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall succeed to and
become vested with all the rights, powers, privileges and duties of the
resigning Agent. Upon the earlier of the acceptance of any appointment as Agent
hereunder by a successor Agent or the effective date of the resigning Agent's
resignation, the resigning Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents, except that any
indemnity rights or other rights in favor of such resigning Agent shall
continue. After any resigning Agent's resignation hereunder, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement and the other Loan
Documents.
9.8. Setoff and Sharing of Payments.
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default, each Lender and
each holder of any Note is hereby authorized at any time or from time to time,
without notice to any Credit Party or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to apply any and all
balances held by it at any of its offices for the account of Borrower or any
Guarantor (regardless of whether such balances are then due to Borrower or any
Guarantor) and any other properties or assets any time held or owing by that
Lender or that holder to or for the credit or for the account of Borrower or any
Guarantor against and on account of any of the Obligations which are not paid
when due. Any Lender or holder of any Note exercising a right to set off or
otherwise receiving any payment on account of the Obligations in excess of its
Pro Rata Share thereof shall purchase for cash (and the other Lenders or holders
shall sell) such participations in each such other Lender's or holder's Pro Rata
Share of the Obligations as would be necessary to cause such Lender to share the
amount so set off or otherwise received with each other Lender or holder in
accordance with their respective Pro Rata Shares. Each Lender's obligation under
this Section 9.8 shall be in addition to and not limitation of its obligations
to purchase a participation in an amount equal to its Pro Rata Share of the
Swing Line Loans under Section 1.1. Borrower and each Guarantor agrees, to the
fullest extent permitted by law, that (a) any Lender or holder may exercise its
right to set off with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amount so set off to other
Lenders and holders and (b) any Lender or holders so purchasing a participation
in the Loans made or other Obligations held by other Lenders or holders may
exercise all rights of set-off, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender or holder were a
direct holder of the Loans and the other Obligations in the amount of such
participation. Notwithstanding the foregoing, if all or any portion of the
set-off amount or payment otherwise received is thereafter recovered from the
Lender that has exercised the right of set-off, the purchase of participations
by that Lender shall be rescinded and the purchase price restored without
interest.
9.9. Advances; Payments; Non-Funding Lenders; Information; Actions in Concert.
(a) Advances; Payments.
(i) Revolving Lenders shall refund or participate in the Swing Line Loan in
accordance with clauses (iii) and (iv) of Section 1.1(c). If the Swing
Line Lender declines to make a Swing Line Loan or if Swing Line
Availability is zero, Agent shall notify Revolving Lenders, promptly
after receipt of a Notice of Revolving Advance and in any event prior
to 12:00 p.m. (Chicago time) on the date such Notice of Revolving
Advance is received, by telecopy, telephone or other similar form of
transmission. Each Revolving Lender shall make the amount of such
Lender's Pro Rata Share of such Revolving Credit Advance available to
Agent in same day funds by wire transfer to Agent's account as set
forth in Annex H not later than 2:00 p.m. (Chicago time) on the
requested funding date, in the case of an Index Rate Loan and not later
than 10:00 a.m. (Chicago time) on the requested funding date in the
case of a LIBOR Loan. After receipt of such wire transfers (or, in the
Agent's sole discretion, before receipt of such wire transfers),
subject to the terms hereof, Agent shall make the requested Revolving
Credit Advance to Borrower. All payments by each Revolving Lender shall
be made without setoff, counterclaim or deduction of any kind.
(ii) On the second Business Day of each calendar week or more frequently as
aggregate cumulative payments in excess of $2,000,000 are received with
respect to the Loans (other than the Swing Line Loan) (each, a
"Settlement Date"), Agent will advise each Lender by telephone, or
telecopy of the amount of such Lender's Pro Rata Share of principal,
interest and Fees paid for the benefit of Lenders with respect to each
applicable Loan. Provided that such Lender has funded all payments and
Advances required to be made by it and purchased all participations
required to be purchased by it under this Agreement and the other Loan
Documents as of such Settlement Date, Agent will pay to each Lender
such Lender's Pro Rata Share of principal, interest and Fees paid by
Borrower since the previous Settlement Date for the benefit of that
Lender on the Loans held by it. To the extent that any Lender (a
"Non-Funding Lender") has failed to fund all such payments and Advances
or failed to fund the purchase of all such participations, Agent shall
be entitled to set off the funding shortfall against that Non-Funding
Lender's Pro Rata Share of all payments received from Borrower. Such
payments shall be made by wire transfer to such Lender's account (as
specified by such Lender in Annex H or the applicable Assignment
Agreement) not later than 1:00 p.m. (Chicago time) on the next Business
Day following each Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent may assume that each
Revolving Lender will make its Pro Rata Share of each Revolving Credit Advance
available to Agent on each funding date. If such Pro Rata Share is not, in fact,
paid to Agent by such Revolving Lender when due, Agent will be entitled to
recover such amount on demand from such Revolving Lender without set-off,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify Borrower and Borrower shall immediately repay such amount to Agent.
Nothing in this Section 9.9(b) or elsewhere in this Agreement or the other Loan
Documents shall be deemed to require Agent to advance funds on behalf of any
Revolving Lender or to relieve any Revolving Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Borrower may
have against any Revolving Lender as a result of any default by such Revolving
Lender hereunder. To the extent that Agent advances funds to Borrower on behalf
of any Revolving Lender and is not reimbursed therefor on the same Business Day
as such Advance is made, Agent shall be entitled to retain for its account all
interest accrued on such Advance until reimbursed by the applicable Revolving
Lender.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this Agreement in the belief
or expectation that a related payment has been or will be received by
Agent from Borrower and such related payment is not received by Agent,
then Agent will be entitled to recover such amount from such Lender on
demand without set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received by Agent under
this Agreement must be returned to Borrower or paid to any other Person
pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document,
Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any
portion of such amount that Agent has distributed to such Lender,
together with interest at such rate, if any, as Agent is required to
pay to Borrower or such other Person, without set-off, counterclaim or
deduction of any kind.
(iii) Non-Funding Lenders. The failure of any Non-Funding Lender to make any
Revolving Credit Advance or any payment required by it hereunder, or to
purchase any participation in any Swing Line Loan to be made or
purchased by it on the date specified therefor shall not relieve any
other Revolving Lender (each such other Revolving Lender, an "Other
Lender") of its obligations to make such Advance or purchase such
participation on such date, but neither any Other Lender nor Agent
shall be responsible for the failure of any Non-Funding Lender to make
an Advance or to purchase a participation required hereunder.
Notwithstanding anything set forth herein to the contrary, a
Non-Funding Lender shall not have any voting or consent rights under or
with respect to any Loan Document or constitute a "Lender" or a
"Revolving Lender" (or be included in the calculation of "Requisite
Lenders", "Requisite Revolving Lenders" or "Supermajority Revolving
Lenders" hereunder) for any voting or consent rights under or with
respect to any Loan Document.
(iv) Dissemination of Information. Agent will use reasonable efforts to
provide Lenders with any notice of Default or Event of Default received
by Agent from, or delivered by Agent to, any Credit Party, with notice
of any Event of Default of which Agent has actually become aware and
with notice of any action taken by Agent following any Event of
Default; provided, however, that Agent shall not be liable to any
Lender for any failure to do so, except to the extent that such failure
is attributable to Agent's gross negligence or willful misconduct.
Lenders acknowledge that Borrower is required to provide Financial
Statements and Collateral Reports to Lenders in accordance with Annexes
E and F hereto and agree that Agent shall have no duty to provide the
same to Lenders.
(v) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights
arising out of this Agreement or the Notes (including exercising any
rights of set-off) without first obtaining the prior written consent of
Agent and Requisite Lenders, it being the intent of Lenders that any
such action to protect or enforce rights under this Agreement and the
Notes shall be taken in concert and at the direction or with the
consent of Agent.
10. SUCCESSORS AND ASSIGNS
10.1. Successors and Assigns.
This Agreement and the other Loan Documents shall be binding
on and shall inure to the benefit of each Credit Party, Agent, Lenders and their
respective successors and assigns (including, in the case of any Credit Party, a
debtor-in-possession on behalf of such Credit Party), except as otherwise
provided herein or therein. No Credit Party may assign, transfer, hypothecate or
otherwise convey its rights, benefits, obligations or duties hereunder or under
any of the other Loan Documents without the prior express written consent of
Agent and Lenders. Any such purported assignment, transfer, hypothecation or
other conveyance by any Credit Party without the prior express written consent
of Agent and Lenders shall be void. The terms and provisions of this Agreement
are for the purpose of defining the relative rights and obligations of each
Credit Party, Agent and Lenders with respect to the transactions contemplated
hereby and no Person shall be a third party beneficiary of any of the terms and
provisions of this Agreement or any of the other Loan Documents.
11. MISCELLANEOUS
11.1. Complete Agreement; Modification of Agreement.
The Loan Documents constitute the complete agreement between
the parties with respect to the subject matter thereof and may not be modified,
altered or amended except as set forth in Section 11.2 below. Any letter of
interest, commitment letter and/or fee letter (other than the GE Capital Fee
Letter) between any Credit Party and Agent or any Lender or any of their
respective affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.
11.2. Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by Agent, no amendment,
modification, termination or waiver of any provision of this Agreement or any of
the Notes, or any consent to any departure by any Credit Party therefrom, shall
in any event be effective unless the same shall be in writing and signed by
Agent and Borrower, and by Requisite Lenders, Requisite Revolving Lenders,
Supermajority Revolving Lenders or all affected Lenders, as applicable. Except
as set forth in clauses (b) and (c) below, all such amendments, modifications,
terminations or waivers requiring the consent of any Lenders shall require the
written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of or consent with respect
to any provision of this Agreement which increases the percentage advance rates
set forth in the definition of the Borrowing Base, or which makes less
restrictive the nondiscretionary criteria for exclusion from Eligible Accounts
and Eligible Inventory set forth in Sections 1.6 and 1.7, shall be effective
unless the same shall be in writing and signed by Agent, Supermajority Revolving
Lenders and Borrower. No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement which waives compliance
with the conditions precedent set forth in Section 2.2 to the making of any Loan
or the incurrence of any Letter of Credit Obligations shall be effective unless
the same shall be in writing and signed by Agent, Requisite Revolving Lenders
and Borrower. Notwithstanding anything contained in this Agreement to the
contrary, no waiver or consent with respect to any Default or any Event of
Default shall be effective for purposes of the conditions precedent to the
making of Loans or the incurrence of Letter of Credit Obligations set forth in
Section 2.2 unless the same shall be in writing and signed by Agent, Requisite
Revolving Lenders and Borrower.
(c) No amendment, modification, termination or waiver shall, unless in writing
and signed by Agent and each Lender directly affected thereby, do any of the
following: (i) increase the principal amount of any Lender's Commitment (which
action shall be deemed to directly affect all Lenders); (ii) reduce the
principal of, rate of interest on or Fees payable with respect to any Loan or
Letter of Credit Obligations of any affected Lender; (iii) extend any scheduled
payment date or final maturity date of the principal amount of any Loan of any
affected Lender; (iv) waive, forgive, defer, extend or postpone any payment of
interest or Fees as to any affected Lender; (v) release any Guaranty or, except
as otherwise permitted herein or in the other Loan Documents, release, or permit
any Credit Party to sell or otherwise dispose of, any Collateral with a value
exceeding $5,000,000 in the aggregate (which action shall be deemed to directly
affect all Lenders); (vi) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which shall be required for
Lenders or any of them to take any action hereunder; and (vii) amend or waive
this Section 11.2 or the definitions of the terms "Requisite Lenders",
"Requisite Revolving Lenders" or "Supermajority Revolving Lenders" insofar as
such definitions affect the substance of this Section 11.2. Furthermore, no
amendment, modification, termination or waiver affecting the rights or duties of
Agent under this Agreement or any other Loan Document shall be effective unless
in writing and signed by Agent, in addition to Lenders required hereinabove to
take such action. Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
No amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the holder of that Note.
No notice to or demand on any Credit Party in any case shall entitle such Credit
Party or any other Credit Party to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this Section 11.2 shall be binding upon
each holder of the Notes at the time outstanding and each future holder of the
Notes.
(d) If, in connection with any proposed amendment, modification, waiver or
termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders, the consent of Requisite
Lenders is obtained, but the consent of other Lenders whose consent is
required is not obtained (any such Lender whose consent is not obtained
as described this clause (i) and in clauses (ii), (iii) and (iv) below
being referred to as a "Non-Consenting Lender"), or
(ii) requiring the consent of Supermajority Revolving Lenders, the consent
of Requisite Revolving Lenders is obtained, but the consent of
Supermajority Revolving Lenders is not obtained, or
(iii) requiring the consent of Requisite Revolving Lenders, the consent of
Revolving Lenders holding fifty-one percent (51%) or more of the
aggregate Revolving Loan Commitments is obtained, but the consent of
Requisite Revolving Lenders is not obtained, or
(iv) requiring the consent of Requisite Lenders, the consent of Lenders
holding fifty-one percent (51%) or more of the aggregate Commitments is
obtained, but the consent of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower's request
Agent, or a Person acceptable to Agent, shall have the right with Agent's
consent and in Agent's sole discretion (but shall have no obligation) to
purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree
that they shall, upon Agent's request, sell and assign to Agent or such Person,
all of the Commitments of such Non-Consenting Lender for an amount equal to the
principal balance of all Loans held by the Non-Consenting Lender and all accrued
interest and Fees with respect thereto through the date of sale, such purchase
and sale to be consummated pursuant to an executed Assignment Agreement.
(e) Upon indefeasible payment in full in cash and performance of all of the
Obligations (other than indemnification Obligations under Section 1.13),
termination of the Commitments and a release of all claims against Agent and
Lenders, and so long as no suits, actions, proceedings, or claims are pending or
threatened against any Indemnified Person asserting any damages, losses or
liabilities that are Indemnified Liabilities, Agent shall deliver to Borrower
termination statements, mortgage releases and other documents necessary or
appropriate to evidence the termination of the Liens securing payment of the
Obligations.
11.3. Fees and Expenses.
Borrower shall reimburse Agent for all out-of-pocket expenses
incurred in connection with the preparation of the Loan Documents (including the
reasonable fees and expenses of all of its special loan counsel, advisors,
consultants and auditors retained in connection with the Loan Documents and the
Related Transactions and advice in connection therewith). Borrower shall
reimburse Agent (and, with respect to clauses (c), (d) and (e) below, all
Lenders) for all fees, costs and expenses, including the reasonable fees, costs
and expenses of counsel or other advisors (including environmental and
management consultants and appraisers) for advice, assistance, or other
representation in connection with:
(a) the forwarding to Borrower or any other Person on behalf of Borrower by
Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or consent with respect to, any of
the Loan Documents or Related Transactions Documents or advice in connection
with the administration of the Loans made pursuant hereto or its rights
hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or action (whether
instituted by Agent, any Lender, Borrower or any other Person) in any way
relating to the Collateral, any of the Loan Documents or any other agreement to
be executed or delivered in connection therewith or herewith, whether as party,
witness, or otherwise, including any litigation, contest, dispute, suit, case,
proceeding or action, and any appeal or review thereof, in connection with a
case commenced by or against Borrower or any other Person that may be obligated
to Agent by virtue of the Loan Documents; including any such litigation,
contest, dispute, suit, proceeding or action arising in connection with any
work-out or restructuring of the Loans during the pendency of one or more Events
of Default; provided, that in the case of reimbursement of counsel for Lenders
other than Agent, such reimbursement shall be limited to one counsel for all
such Lenders;
(d) any attempt to enforce any remedies of Agent or any Lender against any or
all of the Credit Parties or any other Person that may be obligated to Agent or
any Lender by virtue of any of the Loan Documents; including any such attempt to
enforce any such remedies in the course of any work-out or restructuring of the
Loans during the pendency of one or more Events of Default; provided, that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;
(e) any work-out or restructuring of the Loans during the pendency of one or
more Events of Default;
(f) efforts to (i) monitor the Loans or any of the other Obligations, (ii)
evaluate, observe or assess any of the Credit Parties or their respective
affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell,
liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (f) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services, including those in connection with any appellate proceedings; and all
expenses, costs, charges and other fees incurred by such counsel and others in
any way or respect arising in connection with or relating to any of the events
or actions described in this Section 11.3 shall be payable, on demand, by
Borrower to Agent. Without limiting the generality of the foregoing, such
expenses, costs, charges and fees may include: fees, costs and expenses of
accountants, environmental advisors, appraisers, investment bankers, management
and other consultants and paralegals; court costs and expenses; photocopying and
duplication expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services.
11.4. No Waiver.
Agent's or any Lender's failure, at any time or times, to
require strict performance by the Credit Parties of any provision of this
Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders and directed to Borrower specifying
such suspension or waiver.
11.5. Remedies.
Agent's and Lenders' rights and remedies under this Agreement
shall be cumulative and nonexclusive of any other rights and remedies which
Agent or any Lender may have under any other agreement, including the other Loan
Documents, by operation of law or otherwise. Recourse to the Collateral shall
not be required.
11.6. Severability.
Wherever possible, each provision of this Agreement and the
other Loan Documents shall be interpreted in such a manner as to be effective
and valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
11.7. Conflict of Terms.
Except as otherwise provided in this Agreement or any of the
other Loan Documents by specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
11.8. Confidentiality.
Agent and each Lender agree to use commercially reasonable
efforts (equivalent to the efforts Agent or such Lender applies to maintain the
confidentiality of its own confidential information) to maintain as confidential
all confidential information provided to them by the Credit Parties and
designated as confidential for a period of two (2) years following receipt
thereof, except that Agent and each Lender may disclose such information (a) to
Persons employed or engaged by Agent or such Lender in evaluating, approving,
structuring or administering the Loans and the Commitments (who have a similar
obligation to maintain such information as confidential); (b) to any bona fide
assignee or participant or potential assignee or participant that has agreed to
comply with the covenant contained in this Section 11.8 (and any such bona fide
assignee or participant or potential assignee or participant may disclose such
information to Persons employed or engaged by them as described in clause (a)
above); (c) as required or requested by any Governmental Authority or reasonably
believed by Agent or such Lender to be compelled by any court decree, subpoena
or legal or administrative order or process; (d) as, on the advise of Agent's or
such Lender's counsel, required by law; (e) in connection with the exercise of
any right or remedy under the Loan Documents or in connection with any
Litigation to which Agent or such Lender is a party; or (f) which ceases to be
confidential through no fault of Agent or such Lender.
11.9. GOVERNING LAW.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS
OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY AND EACH LENDER HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN XXXX COUNTY,
CITY OF CHICAGO, ILLINOIS SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF
XXXX COUNTY, CITY OF CHICAGO, ILLINOIS AND, PROVIDED, FURTHER NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY AND EACH LENDER EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY AND EACH LENDER HEREBY WAIVES
ANY OBJECTION WHICH SUCH CREDIT PARTY AND SUCH LENDER MAY HAVE BASED UPON LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY AND EACH LENDER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT
PARTY AND EACH LENDER AT THE ADDRESS SET FORTH IN ANNEX I OF THIS AGREEMENT AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT
PARTY'S OR SUCH LENDER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT
IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
11.10. Notices.
Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or serve upon any
other parties any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered (a) upon the earlier of actual receipt and three (3) Business Days
after deposit in the United States Mail, registered or certified mail, return
receipt requested, with proper postage prepaid, (b) upon transmission, when sent
by telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 11.10), (c) one (1)
Business Day after deposit with a reputable overnight courier with all charges
prepaid or (d) when delivered, if hand delivered by messenger, all of which
shall be addressed to the party to be notified and sent to the address or
facsimile number indicated on Annex I or to such other address (or facsimile
number) as may be substituted by notice given as herein provided. The giving of
any notice required hereunder may be waived in writing by the party entitled to
receive such notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to any
Person (other than Borrower or Agent) designated on Annex I to receive copies
shall in no way adversely affect the effectiveness of such notice, demand,
request, consent, approval, declaration or other communication.
11.11. Section Titles.
The Section titles and Table of Contents contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
11.12. Counterparts.
This Agreement may be executed in any number of separate
counterparts, each of which shall collectively and separately constitute one
agreement.
11.13. WAIVER OF JURY TRIAL.
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS RELATED THERETO.
11.14. Press Releases.
Borrower agrees that neither it nor its Affiliates will in the
future issue any press releases or other public disclosure using the name of GE
Capital or its affiliates or referring to this Agreement, the other Loan
Documents or the Related Transactions Documents without at least two (2)
Business Days' prior notice to GE Capital and without the prior written consent
of GE Capital unless (and only to the extent that) Borrower or such Affiliate is
required to do so under law and then, in any event, Borrower or such Affiliate
will consult with GE Capital before issuing such press release or other public
disclosure. Borrower consents to the publication by Agent or any Lender of a
tombstone or similar advertising material relating to the financing transactions
contemplated by this Agreement. Agent or such Lender shall provide a draft of
any such tombstone or similar advertising material to Borrower for review and
comment at least two (2) Business Days prior to the publication thereof. Agent
reserves the right to provide to industry trade organizations information
necessary and customary for inclusion in league table measurements with
Borrower's consent which shall not be unreasonably withheld or delayed.
11.15. Reinstatement.
This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against Borrower for
liquidation or reorganization, should Borrower become insolvent or make an
assignment for the benefit of any creditor or creditors or should a receiver or
trustee be appointed for all or any significant part of Borrower's assets, and
shall continue to be effective or to be reinstated, as the case may be, if at
any time payment and performance of the Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
11.16. Advice of Counsel.
Each of the parties represents to each other party hereto that
it has discussed this Agreement and, specifically, the provisions of Sections
11.9 and 11.13, with its counsel.
11.17. No Strict Construction.
The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
ZOMAX OPTICAL MEDIA, INC., as Borrower
By /s/ Xxxxx X. Xxxxxxxx
Title President
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
By /s/ Xxxxxx Xxxxx
Title Duly Autherized Signatory
ANNEX A (Recitals)
to
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the following
respective meanings and all section references in the following definitions
shall refer to Sections of the Agreement:
"AA Report" shall have the meaning assigned to it in Section
3.4(b).
"Account Debtor" shall mean any Person who may become
obligated to any Credit Party under, with respect to, or on account of, an
Account.
"Accounts" shall mean all "accounts," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party and, in any
event, including (a) all accounts receivable, other receivables, book debts and
other forms of obligations (other than forms of obligations evidenced by Chattel
Paper, Documents or Instruments) now owned or hereafter received or acquired by
or belonging or owing to any Credit Party, whether arising out of goods sold or
services rendered by it or from any other transaction (including any such
obligations which may be characterized as an account or contract right under the
Code), (b) all of each Credit Party's rights in, to and under all purchase
orders or receipts now owned or hereafter acquired by it for goods or services,
(c) all of each Credit Party's rights to any goods represented by any of the
foregoing (including unpaid sellers' rights of rescission, replevin, reclamation
and stoppage in transit and rights to returned, reclaimed or repossessed goods),
(d) all monies due or to become due to any Credit Party, under all purchase
orders and contracts for the sale of goods or the performance of services or
both by such Credit Party or in connection with any other transaction (whether
or not yet earned by performance on the part of such Credit Party) now or
hereafter in existence, including the right to receive the proceeds of said
purchase orders and contracts, and (e) all collateral security and guarantees of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"Acquisition" shall mean the acquisitions described in the
Acquisition Agreements.
"Acquisition Agreements" shall mean the Share Purchase and
Sale Agreement between KAO Corporation and Primary Marketing Group Limited,
dated November 28, 1998; the Asset Purchase and Sale Agreement between KAO
Infosystems Company and Zomax Optical Media, Inc., dated November 28, 1998; and
the Asset Purchase and Sale Agreement between KAO Infosystems Canada Inc. and
3024203 Nova Scotia Company, dated November 28, 1998.
"Advance" shall mean any Revolving Credit Advance or Swing
Line Advance, as the context may require.
"Affiliate" shall mean, with respect to any Person, (a) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, five percent (5%) or more of the
Stock having ordinary voting power in the election of directors of such Persons,
(b) each Person that controls, is controlled by or is under common control with
such Person, (c) each of such Person's officers, directors, joint venturers and
partners and (d) in the case of Borrower, the immediate family members, spouses
and lineal descendants of individuals who are Affiliates of Borrower. For the
purposes of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise; provided, however, that the term "Affiliate" shall
specifically exclude Agent and each Lender.
"Agent" shall mean GE Capital or its successor appointed
pursuant to Section 9.7.
"Agreement" shall mean the Credit Agreement by and among
Borrower, GE Capital, as Agent and Lender and the other Lenders signatory from
time to time to the Agreement.
"Appendices" shall have the meaning assigned to it in the
recitals to the Agreement.
"Applicable L/C Margin" shall mean the per annum fee payable
with respect to outstanding Letter of Credit Obligations as set forth in Section
1.5(a).
"Applicable Margins" means collectively the Applicable L/C
Margin, the Applicable Unused Line Fee Margin, the Applicable Revolver Index
Margin, the Applicable Term Loan Index Margin, the Applicable Revolver LIBOR
Margin and the Applicable Term Loan LIBOR Margin.
"Applicable Revolver Index Margin" shall mean the per annum
interest rate payable in addition to the Index Rate applicable to the Revolving
Loan, as set forth in Section 1.5(a) of the Agreement.
"Applicable Revolver LIBOR Margin" shall mean the per annum
interest rate from time to time payable in addition to the LIBOR Rate applicable
to the Revolving Loan, as set forth in Section 1.5(a) of the Agreement.
"Applicable Term Loan Index Margin" shall mean the per annum
interest rate from time to time payable in addition to the Index Rate applicable
to the Term Loan, as set forth in Section 1.5(a) of the Agreement.
"Applicable Term Loan LIBOR Margin" shall mean the per annum
interest rate from time to time payable in addition to the LIBOR Rate applicable
to the Term Loan, as set forth in Section 1.5(a) of the Agreement.
"Applicable Unused Line Fee Margin" shall mean the per annum
fee, from time to time payable in respect to Borrower's non-use of committed
funds pursuant to Section 1.9(b), which fee is set forth in Section 1.5(a).
"Assignment Agreement" shall have the meaning assigned to it
in Section 9.1(a).
"Borrower" shall have the meaning assigned thereto in the
recitals to the Agreement.
"Borrower Accounts" shall have the meaning assigned to it in
Annex C.
"Borrower Pledge Agreement" shall mean the Pledge Agreement of
even date herewith executed by Borrower in favor of Agent, on behalf of itself
and Lenders, pledging all Stock of its Subsidiaries, if any, and all
Intercompany Notes owing to or held by it.
"Borrowing Availability" shall have the meaning assigned to
it in Section 1.1(a)(i).
"Borrowing Base" shall mean, as of any date of determination
by Agent, from time to time, an amount equal to the sum at such time of:
(a) up to eighty-five percent (85%) of the book value of Borrower's
Eligible Accounts, less any Reserves established by Agent at such time;
and
(b) up to sixty percent (60%) of the book value of Borrower's Eligible
Inventory valued on a first-in, first-out basis (at the lower of cost
or market), less any Reserves established by Agent at such time.
"Borrowing Base Certificate" shall mean a certificate to be
executed and delivered from time to time by Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of Illinois or New York and in reference to LIBOR Loans shall mean any
such day that is also a LIBOR Business Day.
"Canadian Agent" shall mean General Electric Capital Canada,
Inc. or its successor appointed pursuant to the Canadian Credit Agreement.
"Canadian Credit Agreement" shall mean the Credit Agreement
by and among Canadian Subsidiary, Canadian Agent and Canadian Lenders.
"Canadian Lenders" shall mean General Electric Capital Canada,
Inc., the other Lenders named on the signature page of the Canadian Credit
Agreement, and if any such Lender shall decide to assign all or any portion of
the "Obligations" (as defined in the Canadian Credit Agreement), such term shall
include such assignee.
"Canadian LLC" shall mean Zomax Canada Acquisition, LLC, a
Minnesota limited liability company.
"Canadian Loan Documents" shall mean the Canadian Credit
Agreement and all other agreements, instruments, documents and certificates
identified in the Closing Checklist executed and delivered to, or in favor of,
Canadian Agent and/or Canadian Lenders and including all other pledges, powers
of attorney, consents, assignments, contracts, notices, and all other written
matter whether heretofore, now or hereafter executed by or on behalf of Canadian
Subsidiary, or any employee of Canadian Subsidiary, and delivered to Canadian
Agent or any Canadian Lender in connection with the Canadian Credit Agreement or
the transactions contemplated hereby. Any reference in the Canadian Credit
Agreement or any other Canadian Loan Document to a Canadian Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to
such Agreement as the same may be in effect at any and all times such reference
becomes operative.
"Canadian Loan Guaranty" shall mean the Guaranty of even date
herewith executed by Borrower in favor of Canadian Agent and Canadian Lenders.
"Canadian Subsidiary" shall mean Zomax Canada Company.
"Capital Expenditures" shall mean, with respect to any Person,
all expenditures (by the expenditure of cash or the incurrence of Indebtedness)
by such Person during any measuring period for any fixed assets or improvements
or for replacements, substitutions or additions thereto, that have a useful life
of more than one (1) year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as lessee
that, in accordance with GAAP, would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to any
Capital Lease of any Person, the amount of the obligation of the lessee
thereunder that, in accordance with GAAP, would appear on a balance sheet of
such lessee in respect of such Capital Lease.
"Cash Management Systems" shall have the meaning assigned to
it in Section 1.8.
"Change of Control" means any of the following: (a) any person
or group of persons (within the meaning of the Securities Exchange Act of 1934,
as amended) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended) of thirty percent (30%) or more of the issued
and outstanding shares of capital Stock of Borrower having the right to vote for
the election of directors of Borrower under ordinary circumstances; (b) during
any period of twelve consecutive calendar months, individuals who at the
beginning of such period constituted the board of directors of Borrower
(together with any new directors whose election by the board of directors of
Borrower or whose nomination for election by the stockholders of Borrower was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose elections or
nomination for election was previously so approved) cease for any reason other
than death or disability to constitute a majority of the directors then in
office; or (c) Borrower shall cease to own and control all of the economic and
voting rights associated with all of the outstanding capital Stock of any of its
Subsidiaries.
"Charges" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental taxes (including taxes owed to
the PBGC at the time due and payable), levies, assessments, charges, liens,
claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any Credit
Party, (d) any Credit Party's ownership or use of any properties or other
assets, or (e) any other aspect of any Credit Party's business.
"Chattel Paper" shall mean any "chattel paper," as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located.
"Closing Date" shall mean January 6, 1999.
"Closing Checklist" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Annex D.
"Code" shall mean the Uniform Commercial Code as the same may,
from time to time, be enacted and in effect in the State of Illinois; provided,
however, in the event that, by reason of mandatory provisions of law, any or all
of the attachment, perfection or priority of Agent's or any Lender's security
interest in any Collateral is governed by the Uniform Commercial Code as enacted
and in effect in a jurisdiction other than the State of Illinois, the term
"Code" shall mean the Uniform Commercial Code as enacted and in effect in such
other jurisdiction solely for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.
"Collateral" shall mean the property covered by the Security
Agreement and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations.
"Collateral Documents" shall mean the Security Agreement, the
Borrower Pledge Agreement, the Patent Security Agreement, the Trademark Security
Agreement, the Copyright Security Agreement and all similar agreements entered
into guaranteeing payment of, or granting a Lien upon property as security for
payment of, the Obligations.
"Collateral Reports" shall mean the reports with respect to
the Collateral referred to in Annex F.
"Collection Account" shall mean that certain account of Agent,
account number 000-000-00 in the name of Agent at Bankers Trust Company in New
York, New York or such other account as Agent shall specify.
"Commitment Termination Date" shall mean the earliest of (a)
January 6, 2004, (b) the date of termination of Lenders' obligations to make
Advances and/or incur Letter of Credit Obligations or permit existing Loans to
remain outstanding pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrower of the Loans and the cancellation and return (or
stand-by guarantee) of all Letters of Credit or the cash collateralization of
all Letter of Credit Obligations pursuant to Annex B, and the permanent
reduction of the Revolving Loan Commitment and the Swing Line Commitment to zero
dollars.
"Commitments" shall mean (a) as to any Lender, the aggregate
of such Lender's Revolving Loan Commitment (including without duplication the
Swing Line Lender's Swing Line Commitment as a subset of its Revolving Loan
Commitment) and Term Loan Commitment as set forth on Annex J to the Agreement or
in the most recent Assignment Agreement executed by such Lender and (b) as to
all Lenders, the aggregate of all Lenders' Revolving Loan Commitments (including
without duplication the Swing Line Lender's Swing Line Commitment as a subset of
its Revolving Loan Commitment) and Term Loan Commitments, which aggregate
commitment shall be $40,000,000 on the Closing Date, as to each of clauses (a)
and (b), as such Commitments may be reduced, amortized or adjusted from time to
time in accordance with the Agreement.
"Compliance Certificate" shall have the meaning assigned to
it in Annex E.
"Concentration Account" shall have the meaning assigned to it
in Annex C.
"Contracts" shall mean all "contracts," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party, in any
event, including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"Control Letter" means a letter agreement between Agent and
(i) the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of any Credit Party, (iii) a futures commission merchant or clearing house with
respect to commodity accounts and commodity contracts held by any Credit Party,
whereby, among other things, the issuer, securities intermediary or futures
commission merchant disclaims any security interest in the applicable financial
assets, acknowledges the Lien of Agent, on behalf of itself and Lenders, on such
financial assets, and agrees to follow the instructions or entitlement orders of
Agent without further consent by the affected Credit Party.
"Copyright License" shall mean any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.
"Copyright Security Agreements" shall mean the Copyright
Security Agreements made in favor of Agent, on behalf of itself and Lenders, by
each applicable Credit Party.
"Copyrights" shall mean all of the following now owned or
hereafter acquired by any Credit Party: (a) all copyrights and general
intangibles of like nature (whether registered or unregistered), now owned or
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.
"Credit Parties" shall mean Borrower and each of its
Subsidiaries.
"Default" shall mean any event which, with the passage of time
or notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in
Section 1.5(d).
"Disbursement Accounts" shall have the meaning assigned to it
on Annex C.
"Disclosure Schedules" shall mean the Schedules prepared by
Borrower and denominated as Disclosure Schedules 1.4 through 6.7 in the Index to
the Agreement.
"Documents" shall mean any "documents," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located.
"Dollars" or "$" shall mean lawful currency of the United
States of America.
"EBITDA" shall mean, with respect to any Person for any fiscal
period, an amount equal to (a) consolidated net income of such Person for such
period, minus (b) the sum of (i) income tax credits, (ii) interest income, (iii)
gain from extraordinary items for such period, (iv) any aggregate net gain (but
not any aggregate net loss) during such period arising from the sale, exchange
or other disposition of capital assets by such Person (including any fixed
assets, whether tangible or intangible, all inventory sold in conjunction with
the disposition of fixed assets and all securities), and (v) any other non-cash
gains which have been added in determining consolidated net income, in each case
to the extent included in the calculation of consolidated net income of such
Person for such period in accordance with GAAP, but without duplication, plus
(c) the sum of (i) any provision for income taxes, (ii) Interest Expense, (iii)
loss from extraordinary items for such period, (iv) the amount of non-cash
charges (including depreciation and amortization) for such period, (v) amortized
debt discount for such period, and (vi) the amount of any deduction to
consolidated net income as the result of any grant to any members of the
management of such Person of any Stock, in each case to the extent included in
the calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication. For purposes of this definition,
the following items shall be excluded in determining consolidated net income of
a Person: (1) the income (or deficit) of any other Person accrued prior to the
date it became a Subsidiary of, or was merged or consolidated into, such Person
or any of such Person's Subsidiaries; (2) the income (or deficit) of any other
Person (other than a Subsidiary) in which such Person has an ownership interest,
except to the extent any such income has actually been received by such Person
in the form of cash dividends or distributions; (3) the undistributed earnings
of any Subsidiary of such Person to the extent that the declaration or payment
of dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (4) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
income accrued during such period; (5) any write-up of any asset; (6) any net
gain from the collection of the proceeds of life insurance policies; (7) any net
gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of such Person, (8) in the case of a successor
to such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets, and (9) any deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such Subsidiary over the
cost to such Person of the investment in such Subsidiary.
"Eligible Accounts" shall have the meaning assigned to it in
Section 1.6 of the Agreement.
"Eligible Inventory" shall have the meaning assigned to it in
Section 1.7 of the Agreement.
"Environmental Laws" shall mean all applicable federal, state,
local and foreign laws, statutes, ordinances, codes, rules, standards and
regulations, now or hereafter in effect, and in each case as amended or
supplemented from time to time, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.
xx.xx. 9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C. xx.xx. 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. xx.xx. 136 et seq.); the
Solid Waste Disposal Act (42 U.S.C. xx.xx. 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C. xx.xx. 2601 et seq.); the Clean Air Act (42 U.S.C. xx.xx.
7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C. xx.xx. 1251 et
seq.); the Occupational Safety and Health Act (29 U.S.C. xx.xx. 651 et seq.);
and the Safe Drinking Water Act (42 U.S.C. xx.xx. 300(f) et seq.), each as from
time to time amended, and any and all regulations promulgated thereunder, and
all analogous state, local and foreign counterparts or equivalents and any
transfer of ownership notification or approval statutes.
"Environmental Liabilities" shall mean, with respect to any
Person, all liabilities, obligations, responsibilities, response, remedial and
removal costs, investigation and feasibility study costs, capital costs,
operation and maintenance costs, losses, damages, punitive damages, property
damages, natural resource damages, consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" shall mean all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
"Equipment" shall mean all "equipment," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located and, in any event, including all such Credit Party's machinery
and equipment, including processing equipment, conveyors, machine tools, data
processing and computer equipment with software and peripheral equipment (other
than software constituting part of the Accounts), and all engineering,
processing and manufacturing equipment, office machinery, furniture, materials
handling equipment, tools, attachments, accessories, automotive equipment,
trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock
and other equipment of every kind and nature, trade fixtures and fixtures not
forming a part of real property, all whether now owned or hereafter acquired,
and wherever situated, together with all additions and accessions thereto,
replacements therefor, all parts therefor, all substitutes for any of the
foregoing, fuel therefor, and all manuals, drawings, instructions, warranties
and rights with respect thereto, and all products and proceeds thereof and
condemnation awards and insurance proceeds with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to time,
and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit
Party, any trade or business (whether or not incorporated) which, together with
such Credit Party, are treated as a single employer within the meaning of
Sections 414(b), (c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to any Credit Party or
any ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (c) the complete or partial withdrawal of any Credit Party or any ERISA
Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (e) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit
Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within thirty
(30) days; (g) any other event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan
or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h)
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; (i) the loss of a Qualified Plan's qualification or tax exempt status; or
(j) the termination of a Plan described in Section 4064 of ERISA.
"ESOP" shall mean a Plan which is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in
Section 8.1.
"Fair Salable Balance Sheet" shall mean a balance sheet of
Borrower prepared in accordance with Section 3.4(e).
"Federal Funds Rate" shall mean, for any day, a floating rate
equal to the weighted average of the rates on overnight federal funds
transactions among members of the Federal Reserve System, as determined by
Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or any successor thereto.
"Fees" shall mean any and all fees payable to Agent or any
Lender pursuant to the Agreement or any of the other Loan Documents.
"Financial Statements" shall mean the consolidated and
consolidating income statements, statements of cash flows and balance sheets of
Borrower delivered in accordance with Section 3.4 of the Agreement and Annex E
to the Agreement.
"Fiscal Month" shall mean any of the monthly accounting
periods of Borrower.
"Fiscal Quarter" shall mean any of the quarterly accounting
periods of Borrower occurring during a Fiscal Year.
"Fiscal Year" shall mean any of the annual accounting periods
of Borrower ending on the last Friday in December of each year.
"Fixed Charges" shall mean, with respect to any Person for any
fiscal period, (a) the aggregate of all Interest Expense paid or accrued during
such period, plus (b) scheduled payments of principal with respect to
Indebtedness during such period, plus (c) Capital Expenditures during such
period, plus (d) taxes paid in cash by such Person during such period.
"Fixed Charge Coverage Ratio" shall mean, with respect to any
Person for any fiscal period, the ratio of EBITDA to Fixed Charges. In computing
Fixed Charges for any fiscal period, interest and principal payments that are
due within one week after the end of that fiscal period, without duplication,
shall be deemed to have been paid on the last day of that fiscal period.
"Fixtures" shall mean any "fixtures" as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party.
"Funded Debt" shall mean, with respect to any Person, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness and which by its terms matures more than one
(1) year from, or is directly or indirectly renewable or extendible at such
Person's option under a revolving credit or similar agreement obligating the
lender or lenders to extend credit over a period of more than one (1) year from
the date of creation thereof, and specifically including Capital Lease
Obligations, current maturities of long-term debt, revolving credit and
short-term debt extendible beyond one (1) year at the option of the debtor, and
also including, in the case of Borrower, the Obligations and, without
duplication, Guaranteed Indebtedness consisting of guaranties of Funded Debt of
other Persons.
"GAAP" shall mean generally accepted accounting principles in
the United States of America, consistently applied, as such term is further
defined in Annex G to the Agreement.
"GE Capital Fee Letter" shall mean that certain letter, dated
as of November 27, 1998, between GE Capital and Borrower with respect to certain
Fees to be paid from time to time by Borrower to GE Capital.
"General Intangibles" shall mean any "general intangibles," as
such term is defined in the Code, now owned or hereafter acquired by any Credit
Party, and, in any event, including all right, title and interest which such
Credit Party may now or hereafter have in or under any Contract, all customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person (the "primary
obligor") in any manner, including any obligation or arrangement of such Person
(a) to purchase or repurchase any such primary obligation, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet condition
of the primary obligor, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against
loss in respect thereof. The amount of any Guaranteed Indebtedness at any time
shall be deemed to be an amount equal to the lesser at such time of (x) the
stated or determinable amount of the primary obligation in respect of which such
Guaranteed Indebtedness is made and (y) the maximum amount for which such Person
may be liable pursuant to the terms of the instrument embodying such Guaranteed
Indebtedness; or, if not stated or determinable, the maximum reasonably
anticipated liability (assuming full performance) in respect thereof.
"Indebtedness" of any Person shall mean without duplication
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property payment for which is deferred six (6) months or more,
but excluding obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless being contested
in good faith, (b) all reimbursement and other obligations with respect to
letters of credit, bankers' acceptances and surety bonds, whether or not
matured, (c) all obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations and the present value (discounted
at the Index Rate as in effect on the Closing Date) of future rental payments
under all synthetic leases, (f) all obligations of such Person under commodity
purchase or option agreements or other commodity price hedging arrangements, in
each case whether contingent or matured, (g) all obligations of such Person
under any foreign exchange contract, currency swap agreement, interest rate
swap, cap or collar agreement or other similar agreement or arrangement designed
to alter the risks of that Person arising from fluctuations in currency values
or interest rates, in each case whether contingent or matured, (h) all
Indebtedness referred to above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property or other assets (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, and (i) the Obligations.
"Indemnified Liabilities" shall have the meaning assigned to
it in Section 1.13.
"Index Rate" shall mean, for any day, a floating rate equal to
the higher of (i) the rate publicly quoted from time to time by The Wall Street
Journal as the "base rate on corporate loans at large U.S. money center
commercial banks" (or, if The Wall Street Journal ceases quoting a base rate of
the type described, the highest per annum rate of interest published by the
Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus fifty (50) basis points per annum. Each change
in any interest rate provided for in the Agreement based upon the Index Rate
shall take effect at the time of such change in the Index Rate.
"Index Rate Loan" shall mean a Loan or portion thereof bearing
interest by reference to the Index Rate.
"Instruments" shall mean any "instrument," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located, and, in any event, including all certificated securities, all
certificates of deposit, and all notes and other, without limitation, evidences
of indebtedness, other than instruments that constitute, or are a part of a
group of writings that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses,
Patents, Copyrights, Trademarks, trade secrets and customer lists.
"Intercompany Note" shall have the meaning assigned to it in
Section 6.3.
"Interest Expense" shall mean, with respect to any Person for
any fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including, in any event, interest expense with respect to any Funded Debt of
such Person and interest expense for the relevant period that has been
capitalized on the balance sheet of such Person.
"Interest Payment Date" means (a) as to any Index Rate Loan,
the first Business Day of each month to occur while such Loan is outstanding,
(b) as to any LIBOR Loan, the last day of the applicable LIBOR Period; provided,
that in addition to the foregoing, each of (x) the date upon which all of the
Commitments have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an "Interest Payment Date"
with respect to any interest which is then accrued under the Agreement.
"Inventory" shall mean any "inventory," as such term is
defined in the Code, now or hereafter owned or acquired by any Credit Party,
wherever located, and in any event including inventory, merchandise, goods and
other personal property which are held by or on behalf of any Credit Party for
sale or lease or are furnished or are to be furnished under a contract of
service, or which constitute raw materials, work in process or materials used or
consumed or to be used or consumed in such Credit Party's business or in the
processing, production, packaging, promotion, delivery or shipping of the same,
including other supplies.
"Investment Property" shall have the meaning ascribed thereto
in Section 9-115 of the Code in those jurisdictions in which such definition has
been adopted and shall include (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of such Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts held by any Credit
Party; (iv) all commodity contracts held by any Credit Party; and (v) all
commodity accounts held by any Credit Party.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"Irish Subsidiary" shall mean Primary Marketing Group Limited.
"Irish Indirect Subsidiary" shall mean KAO Infosystems
(Ireland) Limited.
"IRS" shall mean the Internal Revenue Service, or any
successor thereto.
"L/C Issuer" shall have the meaning assigned to such term in
Annex B.
"Lenders" shall mean GE Capital, the other Lenders named on
the signature page of the Agreement, and, if any such Lender shall decide to
assign all or any portion of the Obligations, such term shall include such
assignee.
"Letter of Credit Fee" has the meaning ascribed thereto in
Annex B.
"Letter of Credit Obligations" shall mean all outstanding
obligations incurred by Agent and Lenders at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of a reimbursement agreement or guaranty by Agent or purchase of a
participation as set forth in Annex B with respect to any Letter of Credit. The
amount of such Letter of Credit Obligations shall equal the maximum amount which
may be payable by Agent or Lenders thereupon or pursuant thereto.
"Letters of Credit" shall mean commercial or standby letters
of credit issued for the account of Borrower by any L/C Issuer, and bankers'
acceptances issued by Borrower, for which Agent and Lenders have incurred Letter
of Credit Obligations.
"Leverage Ratio" shall mean, with respect to Borrower, on a
consolidated basis, the ratio of (a) Funded Debt as of any date of
determination, to (b) the sum of EBITDA less Capital Expenditures for the twelve
(12) months ending on that date of determination; provided that for purposes of
calculating the Leverage Ratio (i) as of the last day of the second Fiscal
Quarter of Fiscal Year 1999, EBITDA shall be calculated for the six (6) month
period ending on such date of determination and multiplied by 2 and Capital
Expenditures shall be $10,400,000, and (ii) as of the last day of the third
Fiscal Quarter of Fiscal Year 1999, EBITDA shall be calculated for the nine (9)
month period ending on such date of determination and multiplied by 1 1/3 and
Capital Expenditures shall be $10,400,000.
"LIBOR Business Day" shall mean a Business Day on which banks
in the city of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" shall mean a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR Period" shall mean, with respect to any LIBOR Loan,
each period commencing on a LIBOR Business Day selected by Borrower pursuant to
the Agreement and ending one (1), two (2) or three (3) months thereafter, as
selected by Borrower's irrevocable notice to Agent as set forth in Section
1.5(e); provided that the foregoing provision relating to LIBOR Periods is
subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is not a LIBOR
Business Day, such LIBOR Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension would
be to carry such LIBOR Period into another calendar month in which
event such LIBOR Period shall end on the immediately preceding LIBOR
Business Day;
(b) any LIBOR Period that would otherwise extend beyond the Commitment
Termination Date shall end two (2) LIBOR Business Days prior to such
date;
(c) any LIBOR Period pertaining to a LIBOR Loan that begins on the last
LIBOR 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 LIBOR Period) shall end on the last LIBOR Business Day of a
calendar month;
(d) Borrower shall select LIBOR Periods so as not to require a payment or
prepayment of any LIBOR Loan during a LIBOR Period for such Loan; and
(e) Borrower shall select LIBOR Periods so that there shall be no more than
five (5) separate LIBOR Loans in existence at any one time.
"LIBOR Rate" shall mean for each LIBOR Period, a rate of
interest determined by Agent equal to:
(a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period which appears on Telerate Page 3750 as of 11:00
a.m., London time, on the second full LIBOR Business Day next preceding
the first day of each LIBOR Period (unless such date is not a Business
Day, in which event the next succeeding Business Day will be used);
divided by
(b) a number equal to 1.0 minus the aggregate (but without duplication) of
the rates (expressed as a decimal fraction) of reserve requirements in
effect on the day which is two (2) LIBOR Business Days prior to the
beginning of such LIBOR Period (including basic, supplemental, marginal
and emergency reserves under any regulations of the Board of Governors
of the Federal Reserve system or other governmental authority having
jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board which are
required to be maintained by a member bank of the Federal Reserve
System.
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined from such
financial reporting service or other information as shall be mutually
acceptable to Agent and Borrower.
"License" shall mean any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Credit Party.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"Litigation" shall have the meaning assigned to it in Section
3.13.
"Loan Account" shall have the meaning assigned to it in
Section 1.12.
"Loan Documents" shall mean the Agreement, the Notes, the
Canadian Loan Guaranty, the Collateral Documents and all other agreements,
instruments, documents and certificates identified in the Closing Checklist
executed and delivered to, or in favor of, Agent and/or Lenders and including
all other pledges, powers of attorney, consents, assignments, contracts,
notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of any Credit Party, or any employee of any Credit
Party, and delivered to Agent or any Lender in connection with the Agreement or
the transactions contemplated hereby. Any reference in the Agreement or any
other Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to such Agreement as the same may be in
effect at any and all times such reference becomes operative.
"Loans" shall mean the Revolving Loan, the Swing Line Loan and
the Term Loan.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the business, assets, operations, prospects or financial or other
condition of any Credit Party or any of the businesses acquired from Sellers
pursuant to the Acquisition Agreements, (b) Borrower's ability to pay any of the
Loans or any of the other Obligations in accordance with the terms of the
Agreement, (c) the Collateral or Agent's Liens, on behalf of itself and Lenders,
on the Collateral or the priority of such Liens, or (d) Agent's or any Lender's
rights and remedies under the Agreement and the other Loan Documents. Without
limiting the foregoing, any event or occurrence adverse to one or more Credit
Parties which results or could reasonably be expected to result in costs and/or
liabilities in excess of the lesser of $1,000,000 and ten percent (10%) of
Borrowing Availability as of any date of determination shall be deemed to have
had Material Adverse Effect.
"Maximum Amount" shall mean, at any particular time, an amount
equal to the Revolving Loan Commitment of all Lenders.
"Mortgaged Properties" shall have the meaning assigned to it
in Annex D.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA
Affiliate is making, is obligated to make, has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"Net Borrowing Availability" shall mean as of any date of
determination, the lesser of (i) the Maximum Amount and (ii) the Borrowing Base,
in each case less the sum of the Revolving Loan and Swing Line Loan then
outstanding.
"Non-Funding Lender" shall have the meaning assigned to it in
Section 9.9(a)(ii).
"Notes" shall mean the Revolving Notes, the Swing Line Note
and the Term Notes, collectively.
"Notice of Conversion/Continuation" shall have the meaning
assigned to it in Section 1.5(e).
"Notice of Revolving Credit Advance" shall have the meaning
assigned to it in Section 1.1(a).
"Obligations" shall mean all loans, advances, debts,
liabilities and obligations, for the performance of covenants, tasks or duties
or for payment of monetary amounts (whether or not such performance is then
required or contingent, or such amounts are liquidated or determinable) owing by
any Credit Party to Agent or any Lender, and all covenants and duties regarding
such amounts, of any kind or nature, present or future, whether or not evidenced
by any note, agreement or other instrument, arising under the Agreement or any
of the other Loan Documents. This term includes all principal, interest
(including all interest which accrues after the commencement of any case or
proceeding in bankruptcy after the insolvency of, or for the reorganization of
any Credit Party, whether or not allowed in such proceeding), Fees, Charges,
expenses, reasonable attorneys' fees and any other sum chargeable to any Credit
Party under the Agreement or any of the other Loan Documents.
"Overadvance" shall have the meaning assigned to it in Section
1.1(a)(iii).
"Patent Security Agreements" shall mean the Patent Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party.
"Patent License" shall mean rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right with
respect to any invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Credit
Party now holds or hereafter acquires any interest: (a) all letters patent of
the United States or any other country, all registrations and recordings
thereof, and all applications for letters patent of the United States or any
other country, including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State or Territory thereof, or any other country, and (b)
all reissues, continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Permitted Encumbrances" shall mean the following
encumbrances: (a) Liens for taxes or assessments or other governmental Charges
not yet due and payable; (b) pledges or deposits of money securing statutory
obligations under workmen's compensation, unemployment insurance, social
security or public liability laws or similar legislation (excluding Liens under
ERISA); (c) pledges or deposits of money securing bids, tenders, contracts
(other than contracts for the payment of money) or leases to which any Credit
Party is a party as lessee made in the ordinary course of business; (d) inchoate
and unperfected workers', mechanics' or similar liens arising in the ordinary
course of business, so long as such Liens attach only to Equipment, Fixtures
and/or Real Estate; (e) carriers', warehousemen's, suppliers' or other similar
possessory liens arising in the ordinary course of business and securing
liabilities in an outstanding aggregate amount not in excess of $25,000 at any
time, so long as such Liens attach only to Inventory; (f) deposits securing, or
in lieu of, surety, appeal or customs bonds in proceedings to which any Credit
Party is a party; (g) any attachment or judgment lien not constituting an Event
of Default under Section 8.1(j); (h) zoning restrictions, easements, licenses,
or other restrictions on the use of any Real Estate or other minor
irregularities in title (including leasehold title) thereto, so long as the same
do not materially impair the use, value, or marketability of such Real Estate;
(i) presently existing or hereinafter created Liens in favor of Agent, on behalf
of Lenders; and (j) Liens expressly permitted under clauses (b) and (c) of
Section 6.7 of the Agreement.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"Plan" shall mean, at any time, an employee benefit plan, as
defined in Section 3(3) of ERISA, which any Credit Party maintains, contributes
to or has an obligation to contribute to on behalf of participants who are or
were employed by any Credit Party.
"Prior Lender" shall mean Marquette Capital Bank, N.A.
"Prior Lender Obligations" shall mean all of the obligations
of Borrower owing to Prior Lender other than the Indebtedness owing to Prior
Lender described on Schedule 6.3.
"Proceeds" shall mean "proceeds," as such term is defined in
the Code and, in any event, shall include (a) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to any Credit Party from time
to time with respect to any of the Collateral, (b) any and all payments (in any
form whatsoever) made or due and payable to any Credit Party from time to time
in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of governmental authority), (c) any claim of
any Credit Party against third parties (i) for past, present or future
infringement of any Patent or Patent License, or (ii) for past, present or
future infringement or dilution of any Copyright, Copyright License, Trademark
or Trademark License, or for injury to the goodwill associated with any
Trademark or Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute concerning any of the
Collateral, and (e) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral, upon disposition or
otherwise.
"Pro Forma" means the unaudited consolidated and consolidating
balance sheet of Borrower and its Subsidiaries as of September 25, 1998 after
giving pro forma effect to the Related Transactions (provided, that financial
information with respect to Sellers shall be based on financial information of
Sellers as of August 31, 1998).
"Projections" means Borrower's forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all prepared on a Subsidiary by
Subsidiary or division by division basis, if applicable, and otherwise
consistent with the historical Financial Statements of Borrower, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" shall mean with respect to all matters
relating to any Lender (a) with respect to the Revolving Loan (including the
Swing Line Loan as a subset of the Swing Line Lender's Revolving Loan), the
percentage obtained by dividing (i) the Revolving Loan Commitment (including the
Swing Line Commitment as a subset of the Swing Line Lender's Revolving Loan
Commitment), by (ii) the aggregate Revolving Loan Commitments, (b) with respect
to the Term Loan, the percentage obtained by dividing (i) the Term Loan
Commitment of that Lender by (ii) the aggregate Term Loan Commitments of all
Lenders, as any such percentages may be adjusted by assignments permitted
pursuant to Section 9.1, (c) with respect to all Loans, the percentage obtained
by dividing (i) the aggregate Commitments of that Lender by (ii) the aggregate
Commitments of all Lenders, and (d) with respect to all Loans on and after the
Commitment Termination Date, the percentage obtained by dividing (i) the
aggregate outstanding principal balance of the Loans held by that Lender, by
(ii) the outstanding principal balance of the Loans held by all Lenders.
"Qualified Plan" shall mean a Plan which is intended to be
tax-qualified under Section 401(a) of the IRC.
"Real Estate" shall have the meaning assigned to it in Section
3.6.
"Refinancing" shall mean the repayment in full by Borrower of
the Prior Lender Obligations on the Closing Date.
"Refunded Swing Line Loan" shall have the meaning assigned to
it in Section 1.1(c)(iii).
"Related Transactions" means each borrowing under the
Revolving Loan and the Term Loan on the Closing Date, the Acquisition, the
Refinancing, the payment of all fees, costs and expenses associated with all of
the foregoing and the execution and delivery of all of the Related Transactions
Documents.
"Related Transactions Documents" shall mean the Loan Documents
and the Acquisition Agreements.
"Release" shall mean any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment, including the movement
of Hazardous Material through or in the air, soil, surface water, ground water
or property.
"Requisite Lenders" shall mean (a) Lenders having more than
sixty-six and two-thirds percent (66 2/3%) of the Commitments of all Lenders, or
(b) if the Commitments have been terminated, more than sixty-six and two-thirds
percent (66 2/3%) of the aggregate outstanding amount of the Loans.
"Requisite Revolving Lenders" shall mean (a) Lenders having
more than sixty-six and two-thirds percent (66 2/3%) of the Revolving Loan
Commitments of all Lenders, or (b) if the Revolving Loan Commitments have been
terminated, more than sixty-six and two-thirds percent (66 2/3%) of the
aggregate outstanding amount of the Revolving Loan.
"Reserves" shall mean, with respect to the Borrowing Base of
Borrower (a) reserves established by Agent from time to time against Eligible
Inventory pursuant to Section 5.9, (b) reserves established pursuant to Section
5.4(c), and (c) such other reserves against Eligible Accounts, Eligible
Inventory or Borrowing Availability of Borrower which Agent may, in its
reasonable credit judgment, establish from time to time. Without limiting the
generality of the foregoing, Reserves established for dilution of Accounts and
to ensure the payment of accrued Interest Expenses or Indebtedness shall be
deemed to be a reasonable exercise of Agent's credit judgment.
"Restricted Payment" shall mean (a) the declaration or payment
of any dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock,
(b) any payment on account of the purchase, redemption, defeasance, sinking fund
or other retirement of a Person's Stock or any other payment or distribution
made in respect thereof, either directly or indirectly, (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire Stock of such Person now or hereafter outstanding; (e)
any payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such
Person's Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to any
Stockholder of such Person other than payment of compensation in the ordinary
course to stockholders who are employees of such Person; and (g) any payment of
management fees (or other fees of a similar nature) by such Person to any
Stockholder of such Person or their Affiliates.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is
a "welfare plan" as defined in Section 3(2) of ERISA, that provides for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
"Revolving Credit Advance" shall have the meaning assigned to
it in Section 1.1(a)(i).
"Revolving Lenders" shall mean, as of any date of
determination, Lenders having a Revolving Loan Commitment.
"Revolving Loan" shall mean, at any time, the sum of (i) the
aggregate amount of Revolving Credit Advances outstanding to Borrower plus (ii)
the aggregate Letter of Credit Obligations incurred on behalf of Borrower.
Unless the context otherwise requires, references to the outstanding principal
balance of the Revolving Loan shall include the outstanding balance of Letter of
Credit Obligations.
"Revolving Loan Commitment" shall mean (a) as to any Revolving
Lender, the aggregate commitment of such Revolving Lender to make Revolving
Credit Advances (including without duplication Swing Line Advances as a subset
of the Swing Line Lender's Revolving Loan Commitment) and/or incur Letter of
Credit Obligations as set forth on Annex J to the Agreement or in the most
recent Assignment Agreement executed by such Revolving Lender and (b) as to all
Revolving Lenders, the aggregate commitment of all Revolving Lenders to make
Revolving Credit Advances (including without duplication Swing Line Advances as
a subset of the Swing Line Lender's Revolving Loan Commitment) and/or incur
Letter of Credit Obligations, which aggregate commitment shall be $20,000,000 on
the Closing Date, as such amount may be adjusted, if at all, from time to time
in accordance with the Agreement.
"Revolving Note" shall have the meaning assigned to it in
Section 1.1(a)(ii).
"Security Agreement" shall mean the Security Agreement of even
date herewith entered into among Agent, on behalf of itself and Lenders, and
each Credit Party that is a signatory thereto.
"Sellers" shall mean KAO Infosystems Company, a Delaware
corporation, KAO Infosystems Canada Inc., an Ontario corporation, and KAO
Corporation, a Japanese corporation.
"Solvent" shall mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person; (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured; (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (d) such Person is not engaged in a business or
transaction, and is not about to engage in a business or transaction, for which
such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities (such as litigation, guarantees and pension
plan liabilities) at any time shall be computed as the amount which, in light of
all the facts and circumstances existing at the time, represents the amount
which can be reasonably be expected to become an actual or matured liability.
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests, membership interests or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company or equivalent entity 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
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended).
"Subordinated Debt" shall mean any Indebtedness of any Credit
Party subordinated to the Obligations in a manner and form satisfactory to Agent
and Lenders in their sole discretion, as to right and time of payment and as to
any other rights and remedies thereunder.
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time, Stock of
any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or more of such Stock
whether by proxy, agreement, operation of law or otherwise, and (b) any
partnership or limited liability company in which such Person and/or one or more
Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than fifty
percent (50%) or of which any such Person is a general partner or may exercise
the powers of a general partner.
"Supermajority Revolving Lenders" shall mean (a) Lenders
having eighty percent (80%) or more of the Revolving Loan Commitments of all
Lenders, or (b) if the Revolving Loan Commitments have been terminated, eighty
percent (80%) or more of the aggregate outstanding amount of the Revolving Loan
(with the Swing Line Loan being attributed to the Lender making such Loan) and
Letter of Credit Obligations.
"Swing Line Advance" has the meaning assigned to it in Section
1.1(c)(i).
"Swing Line Availability" has the meaning assigned to it in
Section 1.1(c)(i).
"Swing Line Commitment" shall mean, as to the Swing Line
Lender, the commitment of the Swing Line Lender to make Swing Line Loans as set
forth on Annex J to the Agreement, which commitment constitutes a subfacility of
the Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" shall mean GE Capital.
"Swing Line Loan" shall mean at any time, the aggregate amount
of Swing Line Advances outstanding to Borrower.
"Swing Line Note" has the meaning assigned to it in Section
1.1(c)(ii).
"Taxes" shall mean taxes, levies, imposts, deductions, Charges
or withholdings, and all liabilities with respect thereto, excluding taxes
imposed on or measured by the net income of Agent or a Lender by the
jurisdictions under the laws of which Agent and Lenders are organized or any
political subdivision thereof.
"Term Lenders" shall mean those Lenders having Term Loan
Commitments.
"Term Loan" shall have the meaning assigned to it in Section
1.1(b)(i).
"Term Loan Commitment" shall mean (a) as to any Term Lender,
the commitment of such Term Lender to make its Pro Rata Share of the Term Loan
as set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Term Lender, and (b) as to all Term Lenders, the
aggregate commitment of all Term Lenders to make the Term Loan, which aggregate
commitment shall be $12,500,000 on the Closing Date, as to each of clauses (a)
and (b), as such Term Loan Commitments may be reduced, amortized or adjusted
from time to time in accordance with the Agreement.
"Term Note" shall have the meaning assigned to it in Section
1.1(b)(i).
"Termination Date" shall mean the date on which the Loans have
been indefeasibly repaid in full and all other Obligations under the Agreement
and the other Loan Documents have been completely discharged and Letter of
Credit Obligations have been cash collateralized, cancelled or backed by
stand-by letters of credit in accordance with Annex B, and Borrower shall not
have any further right to borrow any monies under the Agreement.
"Third Party Interactives" shall mean all Persons with whom
any Credit Party exchanges data electronically in the ordinary course of
business, including, without limitation, customers, suppliers, third-party
vendors, subcontractors, processors-converters, shippers and warehousemen.
"Title IV Plan" shall mean an employee pension benefit plan,
as defined in Section 3 (2) of ERISA (other than a Multiemployer Plan), which is
covered by Title IV of ERISA, and which any Credit Party or ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"Trademark Security Agreements" shall mean the Trademark
Security Agreements made in favor of Agent, on behalf of Lenders, by each
applicable Credit Party.
"Trademark License" shall mean rights under any written
agreement now owned or hereafter acquired by any Credit Party granting any right
to use any Trademark.
"Trademarks" shall mean all of the following now owned or
hereafter acquired by any Credit Party: (a) all trademarks, trade names,
corporate names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), now owned or existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including registrations, recordings and applications in
the United States Patent and Trademark Office or in any similar office or agency
of the United States, any state or territory thereof, or any other country or
any political subdivision thereof; (b) all reissues, extensions or renewals
thereof; and (c) all goodwill associated with or symbolized by any of the
foregoing.
"Unfunded Pension Liability" shall mean, at any time, the
aggregate amount, if any, of the sum of (a) the amount by which the present
value of all accrued benefits under each Title IV Plan exceeds the fair market
value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV of ERISA, all determined as of the most recent
valuation date for each such Title IV Plan using the actuarial assumptions for
funding purposes in effect under such Title IV Plan, and (b) for a period of
five (5) years following a transaction which might reasonably be expected to be
covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that
could be avoided by any Credit Party or any ERISA Affiliate as a result of such
transaction.
"Year 2000 Assessment" shall mean a comprehensive written
assessment of the nature and extent of each Credit Party's Year 2000 Problems
and Year 2000 Date Sensitive Systems/Components, including, without limitation,
Year 2000 Problems regarding data exchanges with Third Party Interactives.
"Year 2000 Corrective Actions" shall mean, as to each Credit
Party, all actions necessary to eliminate such Person's Year 2000 Problems,
including, without limitation, computer code enhancements and revisions,
upgrades and replacements of Year 2000 Date Sensitive Systems/Components, and
coordination of such enhancements, revisions, upgrades and replacements with
Third Party Interactives.
"Year 2000 Corrective Plan" shall mean, with respect to each
Credit Party, a comprehensive plan to eliminate all of its Year 2000 Problems on
or before November 30, 1999, including without limitation (i) computer code
enhancements or revisions, (ii) upgrades or replacements of Year 2000 Date
Sensitive Systems/Components, (iii) test and validation procedures, (iv) an
implementation time line and budget and (v) designation of specific employees
who will be responsible for planning, coordinating and implementing each phase
or subpart of the Year 2000 Corrective Plan.
"Year 2000 Date Sensitive System/Component" shall mean, as to
any Person, any system software, network software, applications software, data
base, computer file, embedded microchip, firmware or hardware that accepts,
creates, manipulates, sorts, sequences, calculates, compares or outputs calendar
related data accurately; such systems and components shall include, without
limitation, mainframe computers, file server/client systems, computer
workstations, routers, hubs, other network related hardware, and other computer
related software, firmware or hardware and information processing and delivery
systems of any kind and telecommunications systems and other communications
processors, security systems, alarms, elevators and HVAC systems.
"Year 2000 Implementation Testing" shall mean, as to each
Credit Party, (i) the performance of test and validation procedures regarding
Year 2000 Corrective Actions on a unit basis and on a systemwide basis; (ii) the
performance of test and validation procedures regarding data exchanges among the
Credit Parties' Year 2000 Date Sensitive Systems/Components and data exchanges
with Third Party Interactives, and (iii) the design and implementation of
additional Corrective Actions, the need for which has been demonstrated by test
and validation procedures.
"Year 2000 Problems" shall mean, with respect to each Credit
Party, limitations on the capacity or readiness of any such Credit Party's Year
2000 Date Sensitive Systems/Components to accurately accept, create, manipulate,
sort, sequence, calculate, compare or output calendar date information with
respect to calendar year 1999 or any subsequent calendar year beginning on or
after January 1, 2000 (including leap year computations), including, without
limitation, exchanges of information among Year 2000 Date Sensitive
Systems/Components of the Credit Parties and exchanges of information among the
Credit Parties and Year 2000 Date Sensitive Systems/Components of Third Party
Interactives and functionality of peripheral interfaces, firmware and embedded
microchips.
All other undefined terms contained in any of the Loan
Documents shall, unless the context indicates otherwise, have the meanings
provided for by the Code as in effect in the State of Illinois to the extent the
same are used or defined therein. Unless otherwise specified, references in the
Agreement or any of the Appendices to a Section, subsection or clause refer to
such Section, subsection or clause as contained in the Agreement. The words
"herein," "hereof" and "hereunder" and other words of similar import refer to
the Agreement as a whole, including all Annexes, Exhibits and Schedules, as the
same may from time to time be amended, restated, modified or supplemented, and
not to any particular section, subsection or clause contained in the Agreement
or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to Persons include their respective successors and
assigns (to the extent and only to the extent permitted by the Loan Documents)
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons; and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes
and regulations. Whenever any provision in any Loan Document refers to the
knowledge (or an analogous phrase) of any Credit Party, such words are intended
to signify that such Credit Party has actual knowledge or awareness of a
particular fact or circumstance or that such Credit Party, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance.
ANNEX B (Section 1.2)
to
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of the Agreement, Agent and
Revolving Lenders agree to incur, from time to time prior to the Commitment
Termination Date, upon the request of Borrower and for Borrower's account,
Letter of Credit Obligations by causing Letters of Credit to be issued (by a
bank or other legally authorized Person selected by or acceptable to Agent in
its sole discretion (each, an "L/C Issuer")) for Borrower's account and
guaranteed by Agent; provided, however, that if the L/C Issuer is a Revolving
Lender, then such Letters of Credit shall not be guaranteed by Agent but rather
each Revolving Lender shall, subject to the terms and conditions hereinafter set
forth, purchase (or be deemed to have purchased) risk participations in all such
Letters of Credit issued with the written consent of Agent, as more fully
described in paragraph (b)(ii) below. The aggregate amount of all such Letter of
Credit Obligations shall not at any time exceed the least of (i) $5,000,000 (the
"L/C Sublimit"), and (ii) the Maximum Amount less the aggregate outstanding
principal balance of the Revolving Credit Advances and the Swing Line Loan, and
(iii) the Borrowing Base less the aggregate outstanding principal balance of the
Revolving Credit Advances and the Swing Line Loan. No such Letter of Credit
shall have an expiry date which is more than one (1) year following the date of
issuance thereof, and neither Agent nor Revolving Lenders shall be under any
obligation to incur Letter of Credit Obligations in respect of, or purchase risk
participations in, any Letter of Credit having an expiry date which is later
than the Commitment Termination Date.
(b) Advances Automatic; Participations.
(i) In the event that Agent or any Revolving Lender shall make any payment
on or pursuant to any Letter of Credit Obligation, such payment shall
then be deemed automatically to constitute a Revolving Credit Advance
under Section 1.1(a) of the Agreement regardless of whether a Default
or Event of Default shall have occurred and be continuing and
notwithstanding Borrower's failure to satisfy the conditions precedent
set forth in Section 2, and each Revolving Lender shall be obligated to
pay its Pro Rata Share thereof in accordance with the Agreement. The
failure of any Revolving Lender to make available to Agent for Agent's
own account its Pro Rata Share of any such Revolving Credit Advance or
payment by Agent under or in respect of a Letter of Credit shall not
relieve any other Revolving Lender of its obligation hereunder to make
available to Agent its Pro Rata Share thereof, but no Revolving Lender
shall be responsible for the failure of any other Revolving Lender to
make available such other Revolving Lender's Pro Rata Share of any such
payment.
(ii) If it shall be illegal or unlawful for Borrower to incur Revolving
Credit Advances as contemplated by paragraph (b)(i) above because of an
Event of Default described in Section 8.1(h) or (i) or otherwise or if
it shall be illegal or unlawful for any Revolving Lender to be deemed
to have assumed a ratable share of the reimbursement obligations owed
to an L/C Issuer, or if the L/C Issuer is a Revolving Lender, then (i)
immediately and without further action whatsoever, each Revolving
Lender shall be deemed to have irrevocably and unconditionally
purchased from Agent (or such L/C Issuer, as the case may be) an
undivided interest and participation equal to such Revolving Lender's
Pro Rata Share (based on the Revolving Loan Commitments) of the Letter
of Credit Obligations in respect of all Letters of Credit then
outstanding and (ii) thereafter, immediately upon issuance of any
Letter of Credit, each Revolving Lender shall be deemed to have
irrevocably and unconditionally purchased from Agent (or such L/C
Issuer, as the case may be) an undivided interest and participation in
such Revolving Lender's Pro Rata Share (based on the Revolving Loan
Commitments) of the Letter of Credit Obligations with respect to such
Letter of Credit on the date of such issuance. Each Revolving Lender
shall fund its participation in all payments or disbursements made
under the Letters of Credit in the same manner as provided in the
Agreement with respect to Revolving Credit Advances.
(c) Cash Collateral. If Borrower is required to provide cash collateral for any
Letter of Credit Obligations pursuant to the Agreement prior to the Commitment
Termination Date, Borrower will pay to Agent for the benefit of Revolving
Lenders cash or cash equivalents acceptable to Agent ("Cash Equivalents") in an
amount equal to one hundred five percent (105%) of the maximum amount then
available to be drawn under each applicable Letter of Credit outstanding. Such
funds or Cash Equivalents shall be held by Agent in a cash collateral account
(the "Cash Collateral Account") maintained at a bank or financial institution
acceptable to Agent. The Cash Collateral Account shall be in the name of
Borrower and shall be pledged to, and subject to the control of, Agent, for the
benefit of Agent and Lenders, in a manner satisfactory to Agent. Borrower hereby
pledges and grants to Agent, on behalf of Lenders, a security interest in all
such funds and Cash Equivalents held in the Cash Collateral Account from time to
time and all proceeds thereof, as security for the payment of all amounts due in
respect of the Letter of Credit Obligations and other Obligations, whether or
not then due. The Agreement, including this Annex B, shall constitute a security
agreement under applicable law.
If any Letter of Credit Obligations, whether or not then due
and payable, shall for any reason be outstanding on the Commitment Termination
Date, Borrower shall either (i) provide cash collateral therefor in the manner
described above, or (ii) cause all such Letters of Credit and guaranties thereof
to be canceled and returned, or (iii) deliver a stand-by letter (or letters) of
credit in guarantee of such Letter of Credit Obligations, which stand-by letter
(or letters) of credit shall be of like tenor and duration (plus thirty (30)
additional days) as, and in an amount equal to one hundred five percent (105%)
of the aggregate maximum amount then available to be drawn under, the Letters of
Credit to which such outstanding Letter of Credit Obligations relate and shall
be issued by a Person, and shall be subject to such terms and conditions, as are
be satisfactory to Agent in its sole discretion.
From time to time after funds are deposited in the Cash
Collateral Account by Borrower, whether before or after the Commitment
Termination Date, Agent may apply such funds or Cash Equivalents then held in
the Cash Collateral Account to the payment of any amounts, in such order as
Agent may elect, as shall be or shall become due and payable by Borrower to
Lenders with respect to such Letter of Credit Obligations of Borrower and, upon
the satisfaction in full of all Letter of Credit Obligations of Borrower, to any
other Obligations then due and payable.
Neither Borrower nor any Person claiming on behalf of or
through Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrower to Lenders in respect thereof, any funds remaining in the
Cash Collateral Account shall be applied to other Obligations when due and owing
and upon payment in full of such Obligations, any remaining amount shall be paid
to Borrower or as otherwise required by law.
(d) Fees and Expenses. Borrower agrees to pay to Agent for the benefit of
Revolving Lenders, as compensation to such Lenders for Letter of Credit
Obligations incurred hereunder, (x) all costs and expenses incurred by Agent or
any Lender on account of such Letter of Credit Obligations, and (y) for each
month during which any Letter of Credit Obligation shall remain outstanding, a
fee (the "Letter of Credit Fee") in an amount equal to the Applicable L/C Margin
multiplied by the maximum amount available from time to time to be drawn under
the applicable Letter of Credit. Such fee shall be paid to Agent for the benefit
of the Revolving Lenders in arrears, on the first day of each month. In
addition, Borrower shall pay to any L/C Issuer, on demand, such fees (including
all per annum fees), charges and expenses of such L/C Issuer in respect of the
issuance, negotiation, acceptance, amendment, transfer and payment of such
Letter of Credit or otherwise payable pursuant to the application and related
documentation under which such Letter of Credit is issued.
(e) Request for Incurrence of Letter of Credit Obligations. Borrower shall give
Agent at least two (2) Business Days prior written notice requesting the
incurrence of any Letter of Credit Obligation, specifying the date such Letter
of Credit Obligation is to be incurred, identifying the beneficiary to which
such Letter of Credit Obligation relates and describing the nature of the
transactions proposed to be supported thereby. The notice shall be accompanied
by the form of the Letter of Credit (which shall be acceptable to the L/C
Issuer) to be guarantied and, to the extent not previously delivered to Agent,
copies of all agreements between Borrower and the L/C Issuer pertaining to the
issuance of Letters of Credit. Notwithstanding anything contained herein to the
contrary, Letter of Credit applications by Borrower and approvals by Agent and
the L/C Issuer may be made and transmitted pursuant to electronic codes and
security measures mutually agreed upon and established by and among Borrower,
Agent and the L/C Issuer.
(f) Obligation Absolute. The obligation of Borrower to reimburse Agent and
Revolving Lenders for payments made with respect to any Letter of Credit
Obligation shall be absolute, unconditional and irrevocable, without necessity
of presentment, demand, protest or other formalities, and the obligations of
each Revolving Lender to make payments to Agent with respect to Letters of
Credit shall be unconditional and irrevocable. Such obligations of Borrower and
Revolving Lenders shall be paid strictly in accordance with the terms hereof
under all circumstances including the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit or the
Agreement or the other Loan Documents or any other agreement;
(ii) the existence of any claim, set-off, defense or other right which
Borrower or any of its Affiliates or any Lender may at any time have
against a beneficiary or any transferee of any Letter of Credit (or any
Persons or entities for whom any such transferee may be acting), Agent,
any Lender, or any other Person, whether in connection with the
Agreement, the Letter of Credit, the transactions contemplated herein
or therein or any unrelated transaction (including any underlying
transaction between Borrower or any of its Affiliates and the
beneficiary for which the Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by Agent (except as otherwise expressly provided in paragraph
(g)(ii)(C) below) or any L/C Issuer under any Letter of Credit or
guaranty thereof against presentation of a demand, draft or certificate
or other document which does not comply with the terms of such Letter
of Credit or such guaranty;
(v) any other circumstance or happening whatsoever, which is similar to any
of the foregoing; or
(vi) the fact that a Default or an Event of Default shall have occurred and be
continuing.
(g) Indemnification; Nature of Lenders' Duties.
(i) In addition to amounts payable as elsewhere provided in the Agreement,
Borrower hereby agrees to pay and to protect, indemnify, and save
harmless Agent and each Lender from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses
(including attorneys' fees and allocated costs of internal counsel)
which Agent or any Lender may incur or be subject to as a consequence,
direct or indirect, of (A) the issuance of any Letter of Credit or
guaranty thereof, or (B) the failure of Agent or any Lender seeking
indemnification or of any L/C Issuer to honor a demand for payment
under any Letter of Credit or guaranty thereof as a result of any act
or omission, whether rightful or wrongful, of any present or future de
jure or de facto government or Governmental Authority, in each case
other than to the extent solely as a result of the gross negligence or
willful misconduct of Agent or such Lender (as finally determined by a
court of competent jurisdiction).
(ii) As between Agent and any Lender and Borrower, Borrower assumes all
risks of the acts and omissions of, or misuse of any Letter of Credit
by beneficiaries of any Letter of Credit. In furtherance and not in
limitation of the foregoing, to the fullest extent permitted by law
neither Agent nor any Lender shall be responsible: (A) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any
document issued by any party in connection with the application for and
issuance of any Letter of Credit, even if it should in fact prove to be
in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (B) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (C) for failure of the beneficiary of any
Letter of Credit to comply fully with conditions required in order to
demand payment under such Letter of Credit; provided that, in the case
of any payment by Agent under any Letter of Credit or guaranty thereof,
Agent shall be liable to the extent such payment was made solely as a
result of its gross negligence or willful misconduct (as finally
determined by a court of competent jurisdiction) in determining that
the demand for payment under such Letter of Credit or guaranty thereof
complies on its face with any applicable requirements for a demand for
payment under such Letter of Credit or guaranty thereof; (D) for
errors, omissions, interruptions or delays in transmission or delivery
of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (E) for errors in interpretation of technical
terms; (F) for any loss or delay in the transmission or otherwise of
any document required in order to make a payment under any Letter of
Credit or guaranty thereof or of the proceeds thereof; (G) for the
credit of the proceeds of any drawing under any Letter of Credit or
guaranty thereof; and (H) for any consequences arising from causes
beyond the control of Agent or any Lender. None of the above shall
affect, impair, or prevent the vesting of any of Agent's or any
Lender's rights or powers hereunder or under the Agreement.
(iii) Nothing contained herein shall be deemed to limit or to expand any
waivers, covenants or indemnities made by Borrower in favor of any L/C
Issuer in any letter of credit application, reimbursement agreement or
similar document, instrument or agreement between Borrower and such L/C
Issuer.
ANNEX C (Section 1.8)
to
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEMS
Borrower shall, and shall cause its Subsidiaries to, establish
and maintain the Cash Management Systems described below:
(a) On or before the Closing Date and until the Termination Date, Borrower shall
(i) establish lock boxes ("Lock Boxes") at one or more of the banks set forth on
Disclosure Schedule (3.19), and shall request in writing and otherwise take such
reasonable steps to ensure that all Account Debtors forward payment directly to
such Lock Boxes, and (ii) deposit and cause its Subsidiaries to 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 cash, checks, drafts or other similar
items of payment relating to or constituting payments made in respect of any and
all Collateral (whether or not otherwise delivered to a Lock Box) into bank
depository accounts in Borrower's name or any such Subsidiary's name
(collectively, the "Borrower Accounts") at banks set forth on Disclosure
Schedule (3.19) (each, a "Relationship Bank"). On or before the Closing Date,
Borrower shall have established a concentration account in its name (the
"Concentration Account") at the bank which shall be designated as the
Concentration Account bank for Borrower on Disclosure Schedule (3.19) (the
"Concentration Account Bank") which bank shall be satisfactory to Agent.
(b) On or before the Closing Date (or such later date as Agent shall consent to
in writing), the Concentration Account Bank, each bank where a Borrower Account
is located and all other Relationship Banks, shall have entered into tri-party
blocked account agreements with Agent, for the benefit of itself and Lenders,
and Borrower and Subsidiaries thereof, as applicable, in form and substance
acceptable to Agent, which shall become operative on or prior to the Closing
Date. Each such blocked account agreement shall provide, among other things,
that (i) all items of payment deposited in such account and proceeds thereof
deposited in the Concentration Account are held by such bank as agent or
bailee-in-possession for Agent, on behalf of Lenders, (ii) the bank executing
such agreement has no rights of setoff or recoupment or any other claim against
such account, as the case may be, other than for payment of its service fees and
other charges directly related to the administration of such account and for
returned checks or other items of payment, and (iii) from and after the Closing
Date (A) with respect to banks at which a Borrower Account is located, such bank
agrees to forward immediately all amounts in each Borrower Account to the
Concentration Account Bank and to commence the process of daily sweeps from such
Borrower Account into the Concentration Account and (B) with respect to the
Concentration Account Bank, such bank agrees to immediately forward all amounts
received in the Concentration Account to the Collection Account through daily
sweeps from such Concentration Account into the Collection Account. Borrower
shall not, and shall not cause or permit any Subsidiary thereof to, accumulate
or maintain cash in disbursement or payroll accounts as of any date of
determination in excess of checks outstanding against such accounts as of that
date and amounts necessary to meet minimum balance requirements.
(c) So long as no Default or Event of Default has occurred and is continuing,
Borrower may amend Disclosure Schedule (3.19) to add or replace a Relationship
Bank, Lock Box or Borrower Account or to replace any Concentration Account or
any Disbursement Account; provided, however, that (i) Agent shall have consented
in writing in advance to the opening of such account or Lock Box with the
relevant bank and (ii) prior to the time of the opening of such account or Lock
Box, Borrower and/or the Subsidiaries thereof, as applicable, and such bank
shall have executed and delivered to Agent a tri-party blocked account
agreement, in form and substance satisfactory to Agent. Borrower shall close any
of its accounts (and establish replacement accounts in accordance with the
foregoing sentence) promptly and in any event within thirty (30) days of notice
from Agent that the creditworthiness of any bank holding an account is no longer
acceptable in Agent's reasonable judgment, or as promptly as practicable and in
any event within sixty (60) days of notice from Agent that the operating
performance, funds transfer and/or availability procedures or performance with
respect to accounts or lockboxes of the bank holding such accounts or Agent's
liability under any tri-party blocked account agreement with such bank is no
longer acceptable in Agent's reasonable judgment.
(d) The Lock Boxes, Borrower Accounts, Disbursement Accounts and the
Concentration Account shall be cash collateral accounts, with all cash, checks
and other similar items of payment in such accounts securing payment of the
Loans and all other Obligations, and in which Borrower and each Subsidiary
thereof shall have granted a Lien to Agent, on behalf of itself and Lenders,
pursuant to the Security Agreement.
(e) All amounts deposited in the Collection Account shall be deemed received by
Agent in accordance with Section 1.10 of the Agreement and shall be applied (and
allocated) by Agent in accordance with Section 1.11 of the Agreement. In no
event shall any amount be so applied unless and until such amount shall have
been credited in immediately available funds to the Collection Account.
(f) Borrower may maintain, in its name, an account (each a "Disbursement
Account" and collectively, the "Disbursement Accounts") at a bank acceptable to
Agent into which Agent shall, from time to time, deposit proceeds of Revolving
Credit Advances and Swing Line Advances made to Borrower pursuant to Section 1.1
for use by Borrower solely in accordance with the provisions of Section 1.4.
Each bank at which a Disbursement Account is maintained shall execute a Pledge
Agreement in favor of Agent.
(g) Borrower shall and shall cause its Affiliates, officers, employees, agents,
directors or other Persons acting for or in concert with Borrower (each a
"Related Person") to (i) hold in trust for Agent, for the benefit of itself and
Lenders, all checks, cash and other items of payment received by Borrower or any
such Related Person, and (ii) within one (1) Business Day after receipt by
Borrower or any such Related Person of any checks, cash or other items or
payment, deposit the same into a Borrower Account. Borrower and each Related
Person thereof acknowledges and agrees that all cash, checks or items of payment
constituting proceeds of Collateral are the property of Agent and Lenders. All
proceeds of the sale or other disposition of any Collateral, shall be deposited
directly into Borrower Accounts.
ANNEX D (Section 2.1(a))
to
CREDIT AGREEMENT
SCHEDULE OF ADDITIONAL CLOSING DOCUMENTS
In addition to, and not in limitation of, the conditions
described in Section 2.1 of the Agreement, pursuant to Section 2.1(a), the
following items must be received by Agent in form and substance satisfactory to
Agent on or prior to the Closing Date (each capitalized term used but not
otherwise defined herein shall have the meaning ascribed thereto in Annex A to
the Agreement):
A. Appendices. All Appendices to the Agreement, in form and substance
satisfactory to Agent.
B. Revolving Notes, Swing Line Note and Term Notes. Duly executed originals of
the Revolving Notes, Swing Line Note and Term Notes for each applicable Lender,
dated the Closing Date.
C. Security Agreement. Duly executed originals of the Security Agreement, dated
the Closing Date, and all instruments, documents and agreements executed
pursuant thereto.
D. Insurance. Satisfactory evidence that the insurance policies required by
Section 5.4 are in full force and effect, together with appropriate evidence
showing loss payable and/or additional insured clauses or endorsements, as
requested by Agent, in favor of Agent, on behalf of Lenders.
E. Security Interests and Code Filings.
(a) Evidence satisfactory to Agent that Agent (for the benefit of itself and
Lenders) has a valid and perfected first priority security interest in the
Collateral, including (i) such documents duly executed by each Credit Party
(including financing statements under the Code and other applicable documents
under the laws of any jurisdiction with respect to the perfection of Liens) as
Agent may request in order to perfect its security interests in the Collateral
and (ii) copies of Code search reports listing all effective financing
statements that name any Credit Party as debtor, together with copies of such
financing statements, none of which shall cover the Collateral, except for those
relating to the Prior Lender Obligations (all of which shall be terminated on
the Closing Date).
(b) Evidence satisfactory to Agent, including copies, of all UCC-1 and other
financing statements filed in favor of any Credit Party with respect to each
location, if any, at which Inventory may be consigned.
(c) Control Letters from (i) all issuers of uncertificated securities and
financial assets held by Borrower, (ii) all securities intermediaries with
respect to all securities accounts and securities entitlements of Borrower, and
(iii) all futures commission agents and clearing houses with respect to all
commodities contracts and commodities accounts held by Borrower.
F. Termination Statements. UCC-3 or other appropriate termination statements, in
form and substance satisfactory to Agent, manually signed by the Prior Lender
releasing all liens of Prior Lender upon any of the personal property of each
Credit Party, except for the Liens in favor of Prior Lender described on
Schedule 6.7; and termination of all blocked account agreements, bank agency
agreements or other similar agreements or arrangements or arrangements in favor
or for the benefit of Prior Lender or relating to the Prior Lender Obligations.
A. Intellectual Property Security Agreements. Duly executed originals of
Trademark Security Agreements, Copyright Security Agreements and Patent Security
Agreements, each dated the Closing Date and signed by each Credit Party which
owns Trademarks, Copyrights and/or Patents, as applicable, all in form and
substance satisfactory to Agent, together with all instruments, documents and
agreements executed pursuant thereto.
B. Initial Borrowing Base Certificate. Duly executed originals of an initial
Borrowing Base Certificate from Borrower, dated the Closing Date, reflecting
information concerning Eligible Accounts and Eligible Inventory of Borrower as
of November 30, 1998.
C. Initial Notice of Revolving Credit Advance. Duly executed originals of a
Notice of Revolving Credit Advance, dated the Closing Date, with respect to the
initial Revolving Credit Advance to be requested by Borrower on the Closing
Date.
D. Letter of Direction. Duly executed originals of a letter of direction from
Borrower addressed to Agent, on behalf of itself and Lenders, with respect to
the disbursement on the Closing Date of the proceeds of the Term Loan and the
initial Revolving Credit Advance.
E. Cash Management System; Blocked Account Agreements. Evidence satisfactory to
Agent that, as of the Closing Date, Cash Management Systems complying with Annex
C to the Agreement have been established and are currently being maintained in
the manner set forth in such Annex C, together with copies of duly executed
tri-party blocked account and lock box agreements, satisfactory to Agent, with
the banks as required by Annex C.
F. Charter and Good Standing. For each Credit Party, such Person's (a) charter
and all amendments thereto, (b) good standing certificates (including
verification of tax status) in its state of incorporation and (c) good standing
certificates (including verification of tax status) and certificates of
qualification to conduct business in each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
each dated a recent date prior to the Closing Date and certified by the
applicable Secretary of State or other authorized Governmental Authority.
G. Bylaws and Resolutions. For each Credit Party, (a) such Person's bylaws,
together with all amendments thereto and (b) resolutions of such Person's Board
of Directors, approving and authorizing the execution, delivery and performance
of the Loan Documents to which such Person is a party and the transactions to be
consummated in connection therewith, each certified as of the Closing Date by
such Person's corporate secretary or an assistant secretary as being in full
force and effect without any modification or amendment.
H. Incumbency Certificates. For each Credit Party, signature and incumbency
certificates of the officers of each such Person executing any of the Loan
Documents, certified as of the Closing Date by such Person's corporate secretary
or an assistant secretary as being true, accurate, correct and complete.
I. Opinions of Counsel. Duly executed originals of opinions of Xxxxxxxxxx &
Xxxxx, P.A., counsel for the Credit Parties, together with any local counsel
opinions requested by Agent, each in form and substance satisfactory to Agent
and its counsel, dated the Closing Date, and each accompanied by a letter
addressed to such counsel from the Credit Parties, authorizing and directing
such counsel to address its opinion to Agent, on behalf of Lenders, and to
include in such opinion an express statement to the effect that Agent and
Lenders are authorized to rely on such opinion.
J. Borrower Pledge Agreement. Duly executed originals of the Borrower Pledge
Agreement accompanied by (as applicable) (a) share certificates representing the
outstanding Stock being pledged pursuant to such Borrower Pledge Agreement no
more than sixty-six and two-thirds percent (66 2/3%) of voting Stock for foreign
Subsidiaries and stock powers for such share certificates executed in blank and
(b) the original Intercompany Notes and other instruments evidencing
Indebtedness being pledged pursuant to such Borrower Pledge Agreement, duly
endorsed in blank.
K. Accountants' Letters. A letter from the Credit Parties to their independent
auditors authorizing the independent certified public accountants of the Credit
Parties to communicate with Agent and Lenders in accordance with Section 4.2,
and a letter from such auditors acknowledging Lenders' reliance on the auditor's
certification of past and future Financial Statements.
L. Appointment of Agent for Service. An appointment of CT Corporation as each
Credit Party's agent for service of process.
M. Solvency Certificate. The Credit Parties shall deliver to Agent for the
benefit of Lenders a solvency certificate satisfactory in form and substance
satisfactory to Agent.
N. Fee Letter. Duly executed originals of the GE Capital Fee Letter.
O. Officer's Certificate. Agent shall have received duly executed originals of a
certificate of the Chief Financial Officer of Borrower, dated the Closing Date,
stating that, since December 27, 1998 (a) no event or condition has occurred or
is existing which could reasonably be expected to have a Material Adverse Effect
(provided, that Agent acknowledges that the deterioration in the financial
position of Sellers for the year to date period ending August 31, 1998 as
compared to the year ending December 31, 1997 shall not be taken into account
for the purposes hereof); (b) there has been no material adverse change in the
industry in which Borrower operates; (c) no Litigation has been commenced which,
if successful, would have a Material Adverse Effect or could challenge any of
the transactions contemplated by the Agreement and the other Loan Documents; (d)
there have been no Restricted Payments made by any Credit Party; and (e) there
has been no material increase in liabilities, liquidated or contingent, and no
material decrease in assets of Borrower or any of its Subsidiaries.
P. Waivers. Agent, on behalf of Lenders, shall have received landlord waivers
and consents, non-offset agreements, bailee letters and mortgagee agreements in
form and substance satisfactory to Agent, in each case as required pursuant to
Section 5.9.
Q. Audited Financials; Financial Condition. Agent shall have received Borrower's
final Financial Statements for its Fiscal Year ended December 27, 1997, audited
by Xxxxxx Xxxxxxxx LLP and the AA Report. Borrower shall have provided Agent
with its current operating statements, a consolidated and consolidating balance
sheet and statement of cash flows, the Pro Forma, Projections, Fair Salable
Balance Sheet, and a Borrowing Base Certificate with respect to Borrower
certified by its Chief Financial Officer, in each case in form and substance
satisfactory to Agent, and Agent shall be satisfied, in its sole discretion,
with all of the foregoing. Agent shall have further received a certificate of
the Chief Executive Officer and/or the Chief Financial Officer of Borrower,
based on such Pro Forma and Projections, to the effect that (a) Borrower will be
Solvent upon the consummation of the transactions contemplated herein; (b) the
Pro Forma fairly presents the financial condition of Borrower as of the date
thereof after giving effect to the transactions contemplated by the Loan
Documents; (c) the Projections are based upon estimates and assumptions stated
therein, all of which Borrower believes to be reasonable and fair in light of
current conditions and current facts known to Borrower and, as of the Closing
Date, reflect Borrower's good faith and reasonable estimates of its future
financial performance and of the other information projected therein for the
period set forth therein; (d) the Fair Salable Balance Sheet was prepared on the
same basis as the Pro Forma, except that Borrower's assets are set forth therein
at their fair salable values on a going concern basis and the liabilities set
forth therein include all contingent liabilities of Borrower stated at the
reasonably estimated present values thereof; and (e) containing such other
statements with respect to the solvency of Borrower and matters related thereto
as Agent shall request.
R. Assignment of Representations, Warranties, Covenants, Indemnities and Rights.
Agent shall have received a duly executed copy of an Assignment of
Representations, Warranties, Covenants, Indemnities and Rights in respect of
Borrower's, Canadian Subsidiary's and Irish Subsidiary's rights under the
Acquisition Agreements, which assignment shall be expressly permitted under the
Acquisition Agreement or shall have been consented to by the Sellers in writing.
S. Canadian Loan Documents. Duly executed originals of the Canadian Loan
Documents, dated the Closing Date.
T. Other Documents. Such other certificates, documents and agreements respecting
any Credit Party as Agent may, in its sole discretion, request.
ANNEX E (Section 4.1(a))
to
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Borrower shall deliver or cause to be delivered to Agent or to
Agent and Lenders, as indicated, the following:
(a) Monthly Financials. To Agent and Lenders, within thirty (30) days after the
end of each Fiscal Month (other than a Fiscal Month that is the last Fiscal
Month of a Fiscal Quarter), financial information regarding Borrower and its
Subsidiaries, certified by the Chief Financial Officer of Borrower, consisting
of consolidated and consolidating (i) unaudited balance sheets as of the close
of such Fiscal Month and the related statements of income and cash flow for that
portion of the Fiscal Year ending as of the close of such Fiscal Month; (ii)
unaudited statements of income and cash flows for such Fiscal Month, setting
forth in comparative form the figures for the corresponding period in the prior
year and the figures contained in the Projections for such Fiscal Year, all
prepared in accordance with GAAP (subject to normal year-end adjustments); and
(iii) a summary of the outstanding balance of all Intercompany Notes as of the
last day of that Fiscal Month. Such financial information shall be accompanied
by (A) a statement in reasonable detail showing the calculation used in
determining compliance with the Capital Expenditure covenant set forth on Annex
G, and (B) the certification of the Chief Financial Officer of Borrower that (i)
such financial information presents fairly in accordance with GAAP (subject to
normal year-end adjustments) the financial position and results of operations of
Borrower and its Subsidiaries, on a consolidated and consolidating basis, in
each case as at the end of such month and for the period then ended and (ii) any
other information presented is true, correct and complete in all material
respects and that there was no Default or Event of Default in existence as of
such time or, if a Default or Event of Default shall have occurred and be
continuing, describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default;
(b) Quarterly Financials. To Agent and Lenders, within forty-five (45) days
after the end of each Fiscal Quarter, consolidated and consolidating financial
information regarding Borrower and its Subsidiaries, certified by the Chief
Financial Officer of Borrower, including (i) unaudited balance sheets as of the
close of such Fiscal Quarter and the related statements of income and cash flow
for that portion of the Fiscal Year ending as of the close of such Fiscal
Quarter and (ii) unaudited statements of income and cash flows for such Fiscal
Quarter, in each case setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the
Projections for such Fiscal Year, all prepared in accordance with GAAP (subject
to normal year-end adjustments). Such financial information shall be accompanied
by (A) a statement in reasonable detail (each, a "Compliance Certificate")
showing the calculations used in determining compliance with each of the
financial covenants set forth on Annex G which is tested on a quarterly basis
and (B) the certification of the Chief Financial Officer of Borrower that (i)
such financial information presents fairly in accordance with GAAP (subject to
normal year-end adjustments) the financial position, results of operations and
statements of cash flows of Borrower and its Subsidiaries, on both a
consolidated and consolidating basis, as at the end of such Fiscal Quarter and
for the period then ended, (ii) any other information presented is true, correct
and complete in all material respects and that there was no Default or Event of
Default in existence as of such time or, if a Default or Event of Default shall
have occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default. In addition, Borrower shall
deliver to Agent and Lenders, within forty-five (45) days after the end of each
Fiscal Quarter, a management discussion and analysis which includes a comparison
to budget for that Fiscal Quarter and a comparison of performance for that
Fiscal Quarter to the corresponding period in the prior year;
(c) Operating Plan. To Agent and Lenders, as soon as available, but not later
than thirty (30) days after the end of each Fiscal Year, an annual operating
plan for Borrower, approved by the Board of Directors of Borrower, for the
following year, which will include a statement of all of the material
assumptions on which such plan is based, will include monthly balance sheets and
a monthly budget for the following year and will integrate sales, gross profits,
operating expenses, operating profit, cash flow projections and Borrowing
Availability projections all prepared on the same basis and in similar detail as
that on which operating results are reported (and in the case of cash flow
projections, representing management's good faith estimates of future financial
performance based on historical performance), and including plans for personnel,
Capital Expenditures and facilities;
(d) Annual Audited Financials. To Agent and Lenders, within ninety (90) days
after the end of each Fiscal Year, audited Financial Statements for Borrower and
its Subsidiaries on a consolidated and (unaudited) consolidating basis,
consisting of balance sheets and statements of income and retained earnings and
cash flows, setting forth in comparative form in each case the figures for the
previous Fiscal Year, which Financial Statements shall be prepared in accordance
with GAAP, certified without qualification, by an independent certified public
accounting firm of national standing or otherwise acceptable to Agent. Such
Financial Statements shall be accompanied by (i) a statement prepared in
reasonable detail showing the calculations used in determining compliance with
each of the financial covenants set forth on Annex G, (ii) a report from such
accounting firm to the effect that, in connection with their audit examination,
nothing has come to their attention to cause them to believe that a Default or
Event of Default has occurred (or specifying those Defaults and Events of
Default that they became aware of), it being understood that such audit
examination extended only to accounting matters and that no special
investigation was made with respect to the existence of Defaults or Events of
Default, (iii) a letter addressed to Agent, on behalf of itself and Lenders, in
form and substance reasonably satisfactory to Agent and subject to standard
qualifications taken by nationally recognized accounting firms, signed by such
accounting firm acknowledging that Agent and Lenders are entitled to rely upon
such accounting firm's certification of such audited Financial Statements, (iv)
the annual letters to such accountants in connection with their audit
examination detailing contingent liabilities and material litigation matters,
and (v) the certification of the Chief Executive Officer or Chief Financial
Officer of Borrower that all such Financial Statements present fairly in
accordance with GAAP the financial position, results of operations and
statements of cash flows of Borrower and its Subsidiaries on a consolidated and
consolidating basis, as at the end of such year and for the period then ended,
and that there was no Default or Event of Default in existence as of such time
or, if a Default or Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default;
(e) Management Letters. To Agent and Lenders, within five (5) Business Days
after receipt thereof by any Credit Party, copies of all management letters,
exception reports or similar letters or reports received by such Credit Party
from its independent certified public accountants;
(f) Default Notices. To Agent and Lenders, as soon as practicable, and in any
event within five (5) Business Days after an executive officer of Borrower has
actual knowledge of the existence of any Default, Event of Default or other
event which has had a Material Adverse Effect, telephonic or telecopied notice
specifying the nature of such Default or Event of Default or other event,
including the anticipated effect thereof, which notice, if given telephonically,
shall be promptly confirmed in writing on the next Business Day;
(g) SEC Filings and Press Releases. To Agent and Lenders, promptly upon their
becoming available, copies of: (i) all Financial Statements, reports, notices
and proxy statements made publicly available by any Credit Party to its security
holders; (ii) all regular and periodic reports and all registration statements
and prospectuses, if any, filed by any Credit Party with any securities exchange
or with the Securities and Exchange Commission or any governmental or private
regulatory authority; and (iii) all press releases and other statements made
available by any Credit Party to the public concerning material changes or
developments in the business of any such Person;
(h) Subordinated Debt and Equity Notices. To Agent, as soon as practicable,
copies of all material written notices given or received by any Credit Party
with respect to any Subordinated Debt or Stock of such Person, and, within two
(2) Business Days after any Credit Party obtains knowledge of any matured or
unmatured event of default with respect to any Subordinated Debt, notice of such
event of default;
(i) Supplemental Schedules. To Agent, supplemental disclosures, if any, required
by Section 5.6 of the Agreement;
(j) Litigation. To Agent in writing, promptly upon learning thereof, notice of
any Litigation commenced or threatened (in writing) against any Credit Party
that (i) seeks damages in excess of $500,000, (ii) seeks injunctive relief,
(iii) is asserted or instituted against any Plan, its fiduciaries or its assets
or against any Credit Party or ERISA Affiliate in connection with any Plan, (iv)
alleges criminal misconduct by any Credit Party, (v) alleges the violation of
any law regarding, or seeks remedies in connection with, any Environmental
Liabilities; or (vi) involves any product recall;
(k) Insurance Notices. To Agent, disclosure of losses or casualties required by
Section 5.4 of the Agreement;
(l) Lease Default Notices. To Agent, copies of (i) any and all default notices
received under or with respect to any leased location or public warehouse where
Collateral is located, and (ii) such other notices or documents as Agent may
request in its reasonable discretion; and
(m) Closing Balance Sheet. To Agent, within ninety (90) days after the Closing
Date, a consolidated balance sheet of Borrower which reflects stockholders
common equity of at least $49,000,000 after giving effect to the consummation of
the Related Transactions, prepared in accordance with GAAP, and certified
without qualification by an independent certified public accounting firm of
national standing or otherwise acceptable to Agent.
(n) License Agreements. To Agent, as soon as practicable, notices of any
disputes or claims by any of the parties to the license agreements referred to
in Section 8.1(n).
(o) Other Documents. To Agent and Lenders, such other financial and other
information respecting any Credit Party's business or financial condition as
Agent or any Lender shall, from time to time, request.
ANNEX F (Section 4.1(b))
to
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrower shall deliver or cause to be delivered the following:
(a) To Agent, upon its request, and in no event less frequently than ten (10)
days after the end of each Fiscal Month (together with a copy of all or any part
of such delivery requested by any Lender in writing after the Closing Date),
each of the following:
(i) a Borrowing Base Certificate with respect to Borrower, accompanied by
such supporting detail and documentation as shall be requested by Agent
in its reasonable discretion;
(ii) with respect to Borrower, a summary of Inventory by location and type
with a supporting perpetual Inventory report, in each case accompanied
by such supporting detail and documentation as shall be requested by
Agent in its reasonable discretion; and
(iii) with respect to Borrower, a monthly trial balance showing Accounts
outstanding aged from invoice due date as follows: 1 to 30 days, 31 to
60 days, 61 to 90 days and 91 days or more, accompanied by such
supporting detail and documentation as shall be requested by Agent in
its reasonable discretion.
(b) To Agent, on a weekly basis or at such more frequent intervals as Agent may
request from time to time (together with a copy of all or any part of such
delivery requested by any Lender in writing after the Closing Date), collateral
reports with respect to Borrower, including all additions and reductions (cash
and non-cash) with respect to Accounts of Borrower, in each case accompanied by
such supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;
(c) To Agent, at the time of delivery of each of the monthly and quarterly
Financial Statements delivered pursuant to Annex E, a reconciliation of the
Accounts trial balance and month-end Inventory reports of Borrower to Borrower's
general ledger and monthly Financial Statements delivered pursuant to such Annex
E, in each case accompanied by such supporting detail and documentation as shall
be requested by Agent in its reasonable discretion;
(d) To Agent, at the time of delivery of each of the quarterly Financial
Statements delivered pursuant to Annex E, (i) a listing of government contracts
of Borrower subject to the Federal Assignment of Claims Act of 1940; and (ii) a
list of any applications for the registration of any Patent, Trademark or
Copyright with the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency which any Credit Party thereof
has filed in the prior Fiscal Quarter;
(e) Borrower, at its own expense, shall deliver to Agent the results of each
physical verification, if any, which Borrower or any of its Subsidiaries may in
their discretion have made, or caused any other Person to have made on their
behalf, of all or any portion of their Inventory (and, if a Default or an Event
of Default shall have occurred and be continuing, Borrower shall, upon the
request of Agent, conduct, and deliver the results of, such physical
verifications as Agent may require);
(f) Borrower, at its own expense, shall deliver to Agent such appraisals of its
assets as Agent may request at any time after the occurrence and during the
continuance of a Default or an Event of Default, such appraisals to be conducted
by an appraiser, and in form and substance, satisfactory to Agent; and
(g) Such other reports, statements and reconciliations with respect to the
Borrowing Base or Collateral of any or all Credit Parties as Agent shall from
time to time request in its reasonable discretion.
ANNEX G (Section 6.10)
to
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrower shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP consistently applied:
(a) Maximum Capital Expenditures. Borrower and its Subsidiaries on a
consolidated basis shall not make Capital Expenditures during the following
periods that exceed in the aggregate the amounts set forth opposite each of such
periods:
Period Maximum Capital Expenditures per Period
Fiscal Year 1999 $10,400,000
Fiscal Year 2000 $14,100,000
Fiscal Year 2001 $9,200,000
Fiscal Year 2002 and
each Fiscal Year thereafter $9,200,000
; provided, however, that the amount of permitted Capital Expenditures
referenced above will be increased in any period by the positive amount equal to
the lesser of (a) fifty percent (50%) of the amount of permitted Capital
Expenditures for the immediately prior period, and (b) the amount (if any),
equal to the difference obtained by taking the Capital Expenditures limit
specified above for the immediately prior period minus the actual amount of any
Capital Expenditures expended during such prior period (the "Carry Over
Amount"), and for purposes of measuring compliance herewith, the Carry Over
Amount shall be deemed to be the last amount spent on Capital Expenditures in
that succeeding year.
(b) Minimum Fixed Charge Coverage Ratio (Consolidated). Borrower and its
Subsidiaries shall have on a consolidated basis at the end of each Fiscal
Quarter set forth below, a Fixed Charge Coverage Ratio for the 12-month period
then ended (or with respect to the Fiscal Quarters ending on or before the third
Fiscal Quarter of Fiscal Year 1999, the period commencing on January 1, 1999 and
ending on the last day of such Fiscal Quarter) of not less than the following:
0.40 for the period ending on the last day of the first
Fiscal Quarter of Fiscal Year 1999; 0.75 for the period
ending on the last day of the second Fiscal Quarter of
Fiscal Year 1999; 0.95 for the period ending on the last
day of the third Fiscal Quarter of Fiscal Year 1999; 1.20
for the period ending on the last day of the fourth Fiscal
Quarter of Fiscal Year 1999; 1.10 for the period ending on
the last day of the first Fiscal Quarter of Fiscal Year
2000 and for the period ending on the last day of each
Fiscal Quarter thereafter through the fourth Fiscal Quarter
of Fiscal Year 2000; and 1.25 for the period ending on the
last day of the first Fiscal Quarter of Fiscal Year 2001
and for the period ending on the last day of each Fiscal
Quarter thereafter.
(c) Minimum Fixed Charge Coverage Ratio (Borrower Stand Alone). Borrower shall
have at the end of each Fiscal Quarter set forth below, a Fixed Charge Coverage
Ratio for the 12-month period then ended (or with respect to the Fiscal Quarters
ending on or before the third Fiscal Quarter of Fiscal Year 1999, the period
commencing on January 1, 1999 and ending on the last day of such Fiscal Quarter)
of not less than the following:
0.70 for the period ending on the last day of the first
Fiscal Quarter of Fiscal Year 1999; 0.90 for the period
ending on the last day of the second Fiscal Quarter of
Fiscal Year 1999; 1.10 for the period ending on the last
day of the third Fiscal Quarter of Fiscal Year 1999; 1.20
for the period ending on the last day of the fourth Fiscal
Quarter of Fiscal Year 1999; 1.10 for the period ending on
the last day of the first Fiscal Quarter of Fiscal Year
2000 and for the period ending on the last day of each
Fiscal Quarter thereafter through the fourth Fiscal Quarter
of Fiscal Year 2000; and 1.25 for the period ending on the
last day of the first Fiscal Quarter of Fiscal Year 2001
and for the period ending on the last day of each Fiscal
Quarter thereafter.
(d) Maximum Leverage Ratio. Borrower and its Subsidiaries on a consolidated
basis shall have, at the end of each Fiscal Quarter set forth below, a Leverage
Ratio as of the last day of such Fiscal Quarter of not more than the following:
2.60 for the last day of the second Fiscal Quarter of
Fiscal Year 1999; and 2.00 for the last day of the third
Fiscal Quarter of Fiscal Year 1999 and the last day of each
Fiscal Quarter thereafter.
Unless otherwise specifically provided herein, any accounting
term used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then Borrower, Agent and Lenders agree to enter into negotiations in
order to amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrower's and its Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided, however, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"Accounting Changes" means (a) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), (b)
changes in accounting principles concurred in by Borrower's certified public
accountants; (c) purchase accounting adjustments under A.P.B. 16 and/or 17 and
EITF 88-16, and the application of the accounting principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any subsequent
reversal (in whole or in part) of such reserves; and (d) the reversal of any
reserves established as a result of purchase accounting adjustments. All such
adjustments resulting from expenditures made subsequent to the Closing Date
(including capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period. If Agent,
Borrower and Requisite Lenders agree upon the required amendments, then after
appropriate amendments have been executed and the underlying Accounting Change
with respect thereto has been implemented, any reference to GAAP contained in
the Agreement or in any other Loan Document shall, only to the extent of such
Accounting Change, refer to GAAP, consistently applied after giving effect to
the implementation of such Accounting Change. If Agent, Borrower and Requisite
Lenders cannot agree upon the required amendments within thirty (30) days
following the date of implementation of any Accounting Change, then all
Financial Statements delivered and all calculations of financial covenants and
other standards and terms in accordance with the Agreement and the other Loan
Documents shall be prepared, delivered and made without regard to the underlying
Accounting Change.
ANNEX H (Section 1.1(d))
to
CREDIT AGREEMENT
LENDERS' WIRE TRANSFER INFORMATION
GECC/CAF Depository
Bankers Trust
New York, New York
ABA #02100103-3
Account #00000000
Ref: Zomax/CFC4170
ANNEX I (Section 11.10)
to
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
00 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Zomax Account Manager
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with copies to:
Goldberg, Kohn, Bell, Black, Xxxxxxxxxx & Xxxxxx, Ltd.
00 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
and
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Corporate Counsel-Commercial Finance
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(B) If to Borrower, at
Zomax Optical Media, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
With copies to:
Xxxxxxxxxx & Xxxxx, P.A.
1100 International Centre
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
ANNEX J (from Annex A - Commitments definition)
to
CREDIT AGREEMENT
Lender(s):
General Electric Capital Corporation
Revolving Loan Commitment $20,000,000
(including a Swing Line Commitment
of $2,000,000):
Term Loan Commitment: $12,500,000
