Exhibit 4
CREDIT AGREEMENT
BY AND BETWEEN
LASALLE BANK NATIONAL ASSOCIATION
AND
XXXXXX PRODUCTS, INC.
Dated as of March 27, 2001
CREDIT AGREEMENT
This Credit Agreement together with all Exhibits and Schedules attached
hereto and hereby made a part hereof ("Agreement") is made as of the 27th day of
March, 2001, by and between Xxxxxx Products, Inc., a Delaware Corporation
("Xxxxxx"), with its principal place of business and chief executive office at
0000 X. Xxxxx Xxx., Xxx Xxxxxxx, Xxxxxxxx, 00000, various Subsidiaries of Xxxxxx
listed on Schedule 6.12 hereof (Xxxxxx and the Subsidiaries may be referred to
herein collectively as the "Borrower"), and LASALLE BANK NATIONAL ASSOCIATION
(the "Lender").
PRELIMINARY STATEMENTS:
1. The Borrower has requested the Lender to provide it with a
multi-currency revolving credit facility in an aggregate amount of up to
$50,000,000.00.
2. The Borrower will use the proceeds of the facility to provide
for its working capital requirements, general corporate purposes and for planned
and future acquisitions including, but not limited, to Xxxxxx'x planned
acquisition of the assets of IDP North America, a division of Premier Farnell
Corporation.
3. The Lender is willing to make such a facility available to
Borrower based on the terms and subject to the conditions set forth in this
Agreement.
4. Each Subsidiary has determined that its joint and several
liabilities under this Agreement are in furtherance of its corporate or other
organizational purposes and in its best interest and that it will derive
substantial benefit, whether directly or indirectly, from entering into such
obligations by, among other things, enabling (i) each Subsidiary to receive
proceeds from the Loan to be used as working capital, (ii) each Subsidiary to
directly receive proceeds for capital expenditures or indirectly receive capital
assets from capital expenditures made with the proceeds received by other
Subsidiary and (iii) each Subsidiary to obtain additional capital in the future
by direct borrowing or from the proceeds of borrowings of a Subsidiary or
Affiliate.
AGREEMENT
---------
For and in consideration of the foregoing, which is made a part hereof,
the mutual promises, covenants and conditions contained herein, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. DEFINITIONS.
-----------
1.1 General Terms. When used herein, the following terms shall
have the following meanings:
"Account Debtor" shall mean the party who is obligated on or under an
Account. "Accounting Systems Letter" shall have the meaning set forth
in subsection 7.1(G).
"Accounts" shall mean all present and future rights of the Borrower to
payment for goods sold or leased or for services rendered, which are
not evidenced by instruments or chattel paper, and whether or not they
have been earned by performance.
"Acquisition" means the purchase by Xxxxxx of all of the assets from
IPD North America, a division of Premier Farnell Corporation pursuant
to the terms of the Acquisition Documentation.
"Acquisition Documentation" means, collectively, all agreements,
documents, instruments and orders executed and delivered in connection
with the Acquisition.
"Affiliate" shall mean any Person (a) that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with, the Borrower, (b) that directly or
beneficially owns or holds 25% or more of any class of the voting stock
of the Borrower, or (c) 25% or more of the voting stock (or in the case
of a Person which is not a corporation, 25% or more of the equity
interest) of which is owned directly or beneficially or held by the
Borrower. As used in this definition, "control" (including with
correlative meanings the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies
of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires,
any reference to an "Affiliate" is a reference to an Affiliate of the
Borrower.
"Authorized Officer" shall mean, at any time, an individual whose
signature has been certified to Lender on behalf of Borrower pursuant
to a Signature Authorization Certificate actually received by Lender at
such time and whose authority has not been revoked prior to such time
in the manner prescribed in such Signature Authorization Certificate.
"Bankruptcy Code" shall have the meaning set forth in subsection 6.6
hereof.
"Business Day" shall mean a day other than Saturday or Sunday on which
banks in Chicago are open for the transaction of banking business.
"Capital Expenditure" shall mean, as to any Person, any and all
expenditures of such Person for fixed or capital assets, including,
without limitation, the incurrence of capitalized lease obligations,
all as determined in accordance with GAAP, except that capital
expenditures shall not include expenditures for fixed or capital assets
to the extent such expenditures are paid or reimbursed from the
proceeds of insurance.
"Capitalized Lease" shall mean, as to any Person, at any time, any
lease which, in accordance with GAAP, is required to be capitalized on
the consolidated balance sheet of such Person at such time, and
"capitalized lease obligations" of such Person at any time shall mean
the aggregate amount which, in accordance with GAAP, is required to be
reported as a liability on the consolidated balance sheet of such
Person at such time as lessee under Capitalized Leases.
"Change in Control" shall mean the failure of Xxxxxx X. Port or his
Immediate Family to own individually, or through a trust or other
entity for their benefit, including but not limited to Port Investments
LLP, a Delaware Limited Liability Partnership, twenty percent (20%) or
more of the shares of stock of Xxxxxx.
"Closing Date" shall mean March 27, 2001, the closing of the Loan
pursuant to the Agreement.
"Code " shall have the meaning set forth in subsection 1.3 hereof.
"Current Assets" and "Current Liabilities" - "Current Assets" shall
mean the amount of all current assets (exclusive of prepaid expenses)
which would be classified as such on a balance sheet prepared in
accordance with GAAP. "Current Liabilities" shall mean the amount of
all current liabilities which would be classified as such on a balance
sheet prepared in accordance with GAAP, and which include, without
limitation, trade debt, all accrued liabilities, the current portions
of long-term debt and Capitalized Lease obligations.
"Debt Service Coverage Ratio" shall mean EBITDA (as hereinafter
defined) less unfunded Capital Expenditures, divided by current
maturities of long term debt plus interest expense plus dividends.
"Deposit Inventory System" shall have the meaning set forth in Schedule
3.4 hereof.
"Default " shall mean the occurrence or existence of any one or more of
the events described in subsection 9.l hereof.
"Environmental Lien" shall mean a lien in favor of any governmental
entity for (a) any liability under federal or state environmental laws
or regulations, or (b) damages arising from costs incurred by such
governmental entity in response to a release of a hazardous or toxic
waste, substance or constituent, or other substance into the
environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, any successor statute, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean with respect to Xxxxxx (i) any corporation
which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Internal Revenue Code) as Xxxxxx;
(ii) a trade or business under common control (within the meaning of
Section 414(c) of the Internal Revenue Code) with Xxxxxx; or (iii) a
member of the same affiliated service group (within the meaning of
Section 414(m) of the Internal Revenue Code) as Xxxxxx.
"Event of Default" shall mean any event that, if it continues uncured,
will, with lapse of time or notice or both, constitute a Default.
"EBITDA" for any period, shall mean the Borrower's pretax net income
(determined on a consolidated basis in accordance with GAAP) before
interest, tax distributions, dividends, state replacement tax expense,
depreciation, amortization expense (of intangibles, including
capitalized fees and goodwill) and other noncash expenses determined in
accordance with GAAP.
"Financials" shall have the meaning set forth in subsection 6.4 hereof.
"Fiscal Quarter" shall mean a period, three (3) months in duration,
beginning on January 1, April 1, July 1, or October 1 of any Fiscal
Year.
"Fiscal Year" shall mean a period, twelve (12) months in duration
commencing on January 1 and ending on December 31.
"GAAP" shall mean generally accepted accounting principles as in effect
on the date hereof in accordance with the rules, regulations,
pronouncements and opinions of the Financial Accounting Standards Board
and the American Institute of Certified Public Accountants (or their
successors), and as applied in a manner consistent with preparation of
the Financials, subject to the provisions of subsection 1.2.
"Good Faith" shall have the meaning set forth for that term in Section
1-201(19) of the Code, provided that Good Faith shall also mean the
absence of malice or capriciousness on the part of Lender.
"Guaranteed Indebtedness" of any Person means all Indebtedness referred
to in the definition of "Indebtedness" in this Section guaranteed
directly or indirectly in any manner by such Person, or in effect
guaranteed directly or indirectly by such Person (or secured by any
assets of such Person) regardless of whether the liability of such
Person is limited to such assets or otherwise nonrecourse through an
agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness; (ii) to
purchase, sell or lease (as lessee or lessor) property, or to purchase
or sell services, primarily for the purpose of enabling the debtor to
make payment of such Indebtedness or to assure the holder of such
Indebtedness against loss; (iii) to supply funds to, or in any other
manner invest in, the debtor (including any agreement to pay for
property or services irrespective of whether such property is received
or such services are rendered); or (iv) otherwise to assure a creditor
against loss or to grant a security interest in property for the
benefit of any such creditor.
"Immediate Family" shall mean the spouse, former spouse, children,
grandchildren, parents or grandparents of a Person.
"Indebtedness" of any Person means (without duplication), as of any
specified date, the aggregate amount outstanding or owing under (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (including, without limitation,
all obligations in respect of principal, premium, if any, and interest
payable on such indebtedness and all other obligations, contingent or
otherwise, of such Person and in connection with any agreement to
purchase, redeem, exchange, convert or otherwise acquire for value any
capital stock of, or other equity interest in, such Person or any other
Person), but excluding current liabilities for trade payables and other
current liabilities other than for money borrowed, incurred in the
ordinary course of business; (b) all obligations of such Person
evidenced by bonds, notes, debentures or other similar instruments; (c)
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); (d) all obligations of such
Person under Capitalized Leases; (e) all Indebtedness referred to in
clause (a), (b), (c) or (d) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any lien, security interest or other charge or
encumbrance upon or in property (including, without limitation,
accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such
Indebtedness; (f) all Guaranteed Indebtedness of such Person; (g) all
liabilities incurred by such Person or any ERISA Affiliate to the PBGC
upon the termination under Section 4041 or Section 4042 of ERISA of any
Pension Plan; (h) all Withdrawal Liabilities of such Person or any of
its ERISA Affiliates; and (i) all increase in the amount of
contributions required to be made by such Person and its ERISA
Affiliates in each fiscal year of such Person to Multiemployer Plans,
due to the reorganization or termination of any such Multiemployer Plan
within the meaning of
Title IV of ERISA, over the average annual amount of such contributions
required to be made during the last three (3) years preceding such
reorganization or termination.
"Internal Revenue Code , shall mean the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute.
"Inventory" shall mean any and all goods including, without limitation,
goods in transit, wheresoever located, whether now owned or hereafter
acquired by the Borrower, which are held for sale or lease, furnished
under any contract of service or held as raw materials, work-in-process
or supplies, and all materials used or consumed in the Borrower's
business, and shall include such property the sale or other disposition
of which has given rise to Accounts and which has been returned to or
repossessed or stopped in transit by the Borrower.
"Legal Requirement" shall mean any requirement imposed upon Lender by
any law of the United States of America or the United Kingdom or by any
regulation, order, interpretation, ruling of official directive
(whether or not having the force of law) of the Bank of England or any
other board, central bank or governmental or administrative agency,
institution or authority of the United States of America, the United
Kingdom or any political subdivision of either thereof.
"Lending Affiliate" means (a) each office and branch of the Lender, and
(b) each entity which, directly or indirectly, is controlled by or
under common control with the Lender or which controls the Lender and
each office and branch thereof.
"Liabilities" shall mean all of the Borrower's liabilities,
obligations, and indebtedness to the Lender of any and every kind and
nature, whether heretofore, now or hereafter owing, arising, due or
payable and howsoever evidenced, created, incurred, acquired, or owing,
whether primary, secondary, direct, contingent, fixed or otherwise
(including obligations of performance) and whether arising or existing
under written agreement, oral agreement or operation of law, and all of
the Borrower's other indebtedness and obligations to the Lender under
this Agreement and the other Loan Documents.
"LIBOR" shall mean the interest rate determined by the following
formula, rounded upward to the nearest 1/100 of one percent (all
amounts in the calculations will be determined by Lender as of the
first day of the interest period:
LIBOR = London Inter-Bank Offered Rate
------------------------------
(1.00 - Reserve Percentage)
Where,
(a) "London Inter-Bank Offered Rate" means
the rate per annum equal to the offered rate for
deposits in U.S. dollars for the applicable interest
period and for amounts comparable to the LIBOR
Portion published by Bloomberg's Financial Markets
Commodities News at approximately 8:00 a.m. Chicago
time three (3) Business Days before the commencement
of the interest period (or if not so published,
Lender, in its sole discretion, shall designate
another daily financial or governmental publication
of national circulation to determine such rate);
provided, however, that after the first election of
an interest period with respect to any LIBOR Portion,
the London Inter-Bank Offered Rate shall be
determined at approximately 8:00 a.m. Chicago time on
the first Business Day of the month for each interest
period thereafter with respect to such LIBOR Portion.
(b) "Reserve Percentage" means the total of
the maximum reserve percentages for determining the
reserves to be maintained by member banks of the
Federal Reserve System for Eurocurrency Liabilities,
as defined in Federal Reserve Board Regulation D,
rounded upward to the nearest 1/100 of one percent.
The percentage will be expressed as a decimal and
will include, but not be limited to, marginal,
emergency, supplemental, special, and other reserve
percentages.
"LIBOR Based Rate" shall mean LIBOR plus seventy-five (75) basis
points.
"LIBOR Based Rate Advances" shall mean advances under the Loan bearing
interest at rates based upon the LIBOR Based Rate.
"LIBOR Based Rate Interest Period" shall mean a period of 30, 60, 90 or
180 days, as selected by Xxxxxx, commencing on a Business Day selected
by Xxxxxx pursuant to this Agreement. All LIBOR Based Rate Interest
Periods shall be subject to the following additional conditions: (i)
each selection of an Interest Period shall be irrevocable for the
period so selected; (ii) each Interest Period shall be selected in such
a way that no Interest Period shall extend beyond the Maturity Date;
and (iii) if any Interest Period ends on a day other than a Business
Day (a day of the year on which dealings are carried on in the London
interbank market and banks are not required or authorized to close in
Chicago), such Interest Period shall be extended to the next succeeding
day which is a Business Day unless such succeeding day would fall in
the next calendar month, in which event such Interest Period shall end
on the immediately preceding Business Day.
"LIBOR Option" shall mean the option granted pursuant to subsection
2.6(B) to have the interest on all or any portion of the principal
amount of the Loan based on a LIBOR Based Rate.
"LIBOR Portion" - that portion of the Loan specified in a LIBOR Request
which is not less than $1,000,000 and an integral multiple of $250,000
which does not exceed the outstanding balance of the Loan not already
subject to a LIBOR Option and, which, as of the date of the LIBOR
Request specifying such LIBOR Portion, has met the conditions for
basing interest on the LIBOR Based Rate in subsection 2.6(B) hereof and
the LIBOR Based Rate Interest Period of which was commenced and not
terminated.
"LIBOR Request" shall mean a notice in writing (or by telephonic
communication confirmed by telex, telecopy or other facsimile
transmission on the same day as the telephone request) from Xxxxxx to
Lender requesting that interest on a LIBOR Loan be based on the LIBOR
Based Rate, specifying: (i) the first day of the LIBOR Based Rate
Interest Period, (ii) the length of the LIBOR Based Rate Interest
Period consistent with the definition of that term, and (iii) a dollar
amount of the LIBOR Portion consistent with the definition of such
terms.
"Liquid Assets" shall mean the aggregate amount of Borrower's cash,
marketable securities, Accounts and Inventory.
"Loan Account" shall mean the loan account established on the books of
the Lender established pursuant to Section 2.4 hereof.
"Loan" shall have the meaning set forth in subsection 2.1 hereof.
"Loan Documents" shall mean, collectively, all agreements, instruments
and documents, including, without limitation, this Agreement and any
security agreements, loan agreements, notes, guarantees, mortgages,
deeds of trust, subordination agreements, pledges, powers of attorney,
consents, assignments, intercreditor agreements, mortgagee waivers,
reimbursement agreements, contracts, notices, leases, financing
statements and all other written matter whether heretofore, now or
hereafter executed by or on behalf of the Borrower and delivered to the
Lender, in any case in connection with the Loans made hereunder,
together with all agreements, documents or instruments referred to
therein or contemplated thereby, including, without limitation, the
Note.
"Loan Maturity Date" shall have the meaning set forth in subsection
2.8(B). hereof.
"Management Letter" shall have the meaning set forth in subsection
7.1(G) hereof.
"Maximum Facility" shall mean the maximum amount which the Lender has
agreed to consider as a ceiling on the outstanding principal balance of
loans and other extensions of credit to be made to or for the account
of the Borrower under this Agreement. The Maximum Facility shall be
Fifty Million Dollars ($50,000,000.00) United States currency, unless
permanently reduced at Xxxxxx'x election pursuant to Section 2.3.
"Multiemployer Plan" shall mean, with respect to any Person, an
employee benefit plan defined in Section 4001(a) (3) of ERISA which is,
or within the immediately preceding six (6) years was, contributed to
by such Person or an ERISA Affiliate of such Person.
"Negative Pledge" shall have the meaning set forth in subsection 5.1
hereof.
"Negative Pledge Assets" shall mean all property and interests in
property now owned or hereafter acquired by the Borrower in or upon
which a Negative Pledge is granted to the Lender by the Borrower,
whether under this Agreement, the other Loan Documents, or under any
other documents, instruments or writings executed by the Borrower, and
delivered to the Lender.
"Net Income" shall have the meaning provided, and shall be calculated
provided in accordance with GAAP.
" Note" shall have the meaning set forth in subsection 2.1 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean any employee pension benefit plan as defined
in Section 3(2) of ERISA in respect of which Xxxxxx or any ERISA
Affiliate is, or at any time during the immediately preceding five (5)
years was, an "employer" as defined in Section 3(5) of ERISA.
"Permitted Liens" shall mean only those liens, claims and encumbrances
set forth upon Schedule 6.5 hereto.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, entity, party, or
government (whether national, federal, state, provincial, county, city,
municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Prime Based Rate" shall mean the Prime Rate minus 150 basis points.
"Prime Based Rate Advance" shall mean advances under the Loan bearing
interest at rates based upon the Prime Based Rate.
"Prime Rate" shall mean the rate of interest most recently announced by
Lender at Chicago, Illinois as its prime or base rate. A certificate
made by an officer of Lender stating the Prime Rate in effect on any
given day, for the purposes hereof, shall be conclusive evidence of the
Prime Rate in effect on such day. The "Prime Rate" is a base reference
rate of interest adopted by Lender as a general benchmark from which
Lender determines the floating interest rates chargeable on various
loans to borrowers with varying degrees of creditworthiness and
Borrower acknowledges and agrees that Lender has made no
representations whatsoever that the "Prime Rate" is the interest rate
actually offered by Lender to borrowers of any particular
creditworthiness.
"Prime Portion" shall mean that portion of the Loan not subject to a
LIBOR Option.
"Property" shall have the meaning set forth in subsection 10.8(B).
"Real Property" means all of the Borrower's right, title, and interest
in all of those plots, pieces or parcels of land now owned, leased or
hereafter acquired by the Borrower (the "Land"), including, without
limitation, those more particularly described on Exhibit A1, together
with the right, title and interest of the Borrower in and to the
following: the streets, the land lying in the bed of any streets, roads
or avenues, opened or proposed, in front of, adjoining, or abutting the
Land to the center line thereof, the air space and development rights
pertaining to the Land and right to use such air space and development
rights, all rights of way, privileges, liberties, tenements,
hereditaments and appurtenances belonging or in any way appertaining
thereto, all easements now or hereafter benefitting the Land and all
royalties and all rights appertaining to the use and enjoyment of the
Land, including, without limitation, all alley, vault, drainage,
mineral, water, oil, and gas rights, timber, sewers, pipes, conduits,
wires, and other facilities furnishing utility or other services to the
Land and other similar rights, together with all of the buildings and
other improvements and fixtures now or hereafter erected on the Land.
"Responsible Officer" shall mean (i) any one or more of the officers of
Borrower listed on Exhibit F, (ii) an officer elected or appointed by
the Board of Directors of a Borrower to replace an officer listed on
Exhibit F, or (iii) an officer not listed on Exhibit F but having
substantially the same or similar responsibilities as an officer so
listed on Exhibit F, including, but not limited to, officers of newly
created or acquired subsidiaries.
"Signature Authorization Certificate" shall mean a certificate
substantially in the form attached hereto as Exhibit B now or hereafter
executed on behalf of Xxxxxx and delivered to Lender.
"Subsidiary" shall mean, with respect to any Borrower, any corporation
or other entity of which more than fifty percent (50%) of the
outstanding capital stock or other membership interest having ordinary
voting power to elect a majority of the board of directors or
controlling body of such corporation or entity (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 by such
Borrower.
"Tax" - in relation to any LIBOR Portion and the applicable LIBOR Based
Rate, any tax, levy, impost, duty, deduction, withholding or other
charges of whatever nature required by any Legal Requirement (i) to be
paid by Lender and/or (ii) to be withheld or deducted from any payment
otherwise required hereby to be made by Borrower to Lender; provided,
that the term "Tax" shall not include any taxes imposed upon the net
income of Lender by the United States of America or any political
subdivision thereof.
"Term" shall mean the period from the Closing Date to the Loan Maturity
Date.
"Termination Event" shall mean (i) with respect to any Pension Plan,
the occurrence of a reportable event described in Section 4043 of ERISA
and the regulations issued thereunder; or (ii) the withdrawal of the
Borrower or any ERISA Affiliate from a Pension
Plan during a plan year in which it is a "substantial employer" as
defined in Section 4001(a) (2) of ERISA; or (iii) the occurrence of an
obligation of the Borrower or any ERISA Affiliate arising under
Section 4041 of ERISA to provide participants in a Pension Plan and
other affected parties with a written notice of intent to terminate
the Pension Plan; or (iv) the institution of proceedings to terminate
a Pension Plan by the Pension Benefit Guaranty Corporation; or (v) any
other event or condition which might constitute grounds under Section
4041(A) or 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Pension Plan; or (vi) the partial or
complete withdrawal of the Borrower or any ERISA Affiliate from a
"Multiemployer Plan" (as defined in subsection 6.18 hereof).
"Third Party Goods" shall mean all raw materials, work-in-process and
finished goods owned by Persons other than the Borrower and in
Borrower's possession.
"UFCA" shall mean the Uniform Fraudulent Conveyances Act.
"UFTA" shall mean the Uniform Fraudulent Transfers Act.
"Withdrawal Liability" shall have the meaning given to such term under
Part I of the Subtitle E of Title IV of ERISA.
1.2 Accounting Terms. Calculations and determinations of financial and
accounting terms used and not otherwise specifically defined hereunder shall be
made and determined, both as to classification of items and as to amount, in
accordance with GAAP. If any changes in accounting principles or practices from
GAAP are occasioned by the promulgation of rules, regulations, pronouncements
and opinions by or required by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or any successor thereto or
agencies with similar functions), which result in a change in the method of
accounting in the calculation of financial covenants, standards or terms
contained in this Agreement or any other Financing Agreement, the parties hereto
agree to enter into negotiations to amend such provisions so as equitably to
reflect such changes to the end that the criteria for evaluating Borrower's
financial condition and performance will be the same after such changes as they
were before such changes, and if the parties fail to agree on the amendment of
such provisions, Borrower shall continue to provide calculations for all
financial covenants, perform all financial covenants and otherwise observe all
financial standards and terms in accordance with applicable accounting
principles and practices in effect immediately prior to such changes.
Calculations with respect to financial covenants required to be stated in
accordance with applicable accounting principles and practices in effect
immediately prior to such changes shall be reviewed and certified by Borrower's
independent certified public accountants.
1.3 Other Terms Defined in Illinois Uniform Commercial Code. All other
terms contained in this Agreement (and which are not otherwise specifically
defined herein) shall have the meanings provided in the Uniform Commercial Code
of the State of Illinois (the "Code") to the extent the same are used or defined
therein.
1.4 Other Definitional Provisions. Whenever the context so requires,
the neuter gender includes the masculine and feminine, the singular number
includes the plural, and vice versa.
2. CREDIT.
------
2.1 Loan, Purpose, etc.
(A) Provided there does not then exist a Default or an Event of
Default, subject to the provisions of Section 4 below, and subject to the other
provisions and conditions of this Agreement, the Lender agrees, following the
Borrower's execution of this Agreement and all agreements and documents
contemplated hereby, to advance to the Borrower on a revolving credit basis
(collectively, the " Loan") the Maximum Facility. Each advance to the Borrower
under this subsection 2.1 shall be in multiples of Two Hundred Fifty Thousand
Dollars ($250,000.00) and shall, on the day of such advance, be deposited, in
immediately available funds, in the Xxxxxx'x demand deposit account with the
Lender, or in such other account with the Lender as Xxxxxx may, from time to
time, designate. The Loan made by the Lender to the Borrower under this
subsection 2.1 shall be evidenced, in part, by a promissory note of even date
herewith in the form attached hereto as Exhibit C (the " Note") with the blanks
appropriately filled. The Liabilities evidenced by the Note shall become
immediately due and payable, (i) as provided in subsection 9.1 hereof; (ii)
without notice or demand upon the Loan Maturity Date pursuant to subsection
2.8(A) hereof; or (iii) without notice or demand upon termination of this
Agreement pursuant to subsection 2.8 hereof.
(B) Purpose. The proceeds of the Loan shall be used by Borrower for
working capital requirements and general corporate purposes and for the
Acquisition or future acquisitions.
(C) Limits. The aggregate outstanding principal balance of the Loan
shall not at any time exceed the Maximum Facility.
2.2 Prepayments. Borrower shall at any time and from time to time have
the right to prepay, in whole or in part, the principal amount of the Loan
outstanding or interest due without any penalty or premium. Such prepayment
shall be applied in the following order of priority: (1) amounts (other than
principal and interest) due and payable to Lender under this Agreement, the
Note, or the other Loan Documents; (2) accrued but unpaid interest on the
outstanding principal balance of the Loan; and (3) the outstanding principal
balance of the Loan.
2.3 Facility Reduction. Borrower may, at any time during the Term,
elect to permanently reduce the Maximum Facility upon the following terms and
conditions: (i) Xxxxxx shall provide Lender an irrevocable written notice no
less than thirty (30) days prior to the intended effective date of the permanent
reduction to the Maximum Facility (the "Facility Reduction Notice"); (ii) the
Facility Reduction Notice shall state the total amount of the intended reduction
to the Maximum Facility (" Maximum Facility Reduction") and the effective date
of the Maximum Facility Reduction; (iii) the aggregate outstanding principal
balance of the Loan as of the date of the Facility Reduction Notice shall not
exceed the Maximum Facility as reduced by the Maximum Facility Reduction (the
"Reduced Maximum Facility"); and (iv) the aggregate
outstanding principal balance of the Loan subsequent to the Facility Reduction
Notice shall not at any time thereafter exceed the Reduced Maximum Facility.
Notwithstanding anything to the contrary contained in this Section 3.2 to the
contrary, the Maximum Facility Reduction shall in no event be less than five
million dollars ($5,000,000.00).
2.4 The Borrower's Loan Account. The Lender shall maintain a loan
account (the "Loan Account") on its internal data control system in which shall
be recorded (i) all loans and advances made by the Lender to the Borrower
pursuant to this Agreement, (ii) all payments made by the Borrower on all such
loans and advances, and (iii) all other appropriate debits and credits as
provided in this Agreement, including, without limitation, all fees, charges,
expenses and interest. All entries in the Borrower's Loan Account shall be made
in accordance with the Lender's customary accounting practices as in effect from
time to time. Subject to adjustments and objections (if any) pursuant to
subsection 2.5 below, the Borrower promises to pay the amount reflected as owing
by it under its Loan Account and all of its other obligations hereunder and
under any other Loan Documents as such amounts become due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) pursuant to
the terms of this Agreement and the other Loan Documents.
2.5 Statements. All advances and other financial accommodations to the
Borrower, and all other debits and credits provided for in this Agreement, shall
be evidenced by entries made by the Lender in its internal data control systems
showing the date, amount and reason for each such debit or credit. Until such
time as the Lender shall have rendered to the Borrower written statements of
account as provided herein, the balance in the Borrower's Loan Account, as set
forth on the Lender's most recent printout, shall be rebuttably presumptive
evidence of the amounts due and owing the Lender by the Borrower. Not more than
twenty (20) days after the last day of each Fiscal Quarter, the Lender shall
render to the Borrower a statement setting forth the balance of the Borrower's
Loan Account, including principal, interest, expenses and fees. Each such
statement shall be subject to subsequent adjustment by the Lender but shall,
absent manifest errors or omissions, be rebuttably presumed correct and shall
constitute an account stated unless, within thirty (30) days after receipt of
such statement from the Lender, the Borrower shall deliver to the Lender written
objection thereto specifying the error or errors, if any, contained in such
statement. Lender shall, upon request, provide supporting detail as to third
party charges, such as attorneys' fees.
2.6 Interest and Fees.
Interest Rate. The Borrower shall pay to the Lender interest, as
follows:
(A) Interest.
(i) Prime Portion. Interest shall accrue on the Prime
Portion outstanding at the end of each day (computed
on the basis of a calendar year of 360 days) at a
fluctuating rate per annum equal to the Prime Based
Rate. After the date hereof, the foregoing rate of
interest shall be increased or decreased, as the case
may be, by an amount equal to any increase or
decrease in the Prime Based Rate, with such
adjustments to be
effective as of the opening of business on the day
that any such change in the Prime Based Rate becomes
effective. The Prime Based Rate in effect on the date
hereof shall be the Prime Based Rate effective on the
opening of business on the date hereof, but if this
Agreement is executed on a day that is not a Business
Day, the Prime Based Rate in effect on the date
hereof shall be the Prime Based Rate effective as of
the opening of business on the last Business Day
immediately preceding the date hereof.
(ii) LIBOR Portion. Interest shall accrue on each
LIBOR Portion outstanding at the end of each
day (computed on the basis of a calendar
year of 360 days) at rates equal to the sum
of the LIBOR Based Rate applicable to each
such LIBOR Portion.
(B) LIBOR Option.
(i) Conditions for Basing Interest for the Loan on the
LIBOR Based Rate. Upon the condition that:
(a) The Lender shall have received a
LIBOR Request from Xxxxxx by 12:00
p.m. on the first Business Day
immediately prior to the first day
of the LIBOR Based Rate Interest
Period requested;
(b) There shall have occurred no change
in applicable law which would make
it unlawful for the Lender to obtain
deposits of U.S. dollars in the
London interbank foreign currency
deposits market;
(c) As of the date of the LIBOR Request
and the first day of the LIBOR Based
Rate Interest Period, there shall
exist no Default or Event of Default
which in either case has not been
waived by the Lender; and
(d) The Lender shall not have determined
in Good Faith that the Lender is
unable to determine the LIBOR Based
Rate in respect of the requested
LIBOR Based Rate Interest Period or
that the Lender is unable to obtain
deposits of U.S. dollars in the
London interbank foreign currency
deposits market in the applicable
amounts and for the requested LIBOR
Based Rate Interest Period;
(ii) Indemnification for Funding and Other
Losses. Each LIBOR Request shall be
irrevocable and binding on Borrower.
Borrower shall indemnify Lender for actual
losses suffered by Lender to the extent
required as a result of Borrower's failure
to fulfill, on or before the date specified
in any LIBOR Request, the applicable
conditions set forth in this Agreement,
including, without limitation, any loss or
expense incurred by reason of the
liquidation or redeployment of deposits or
other funds acquired by Lender to fund or
maintain the requested LIBOR Portion, when,
as a result of such failure on the part of
Borrower, interest on such LIBOR Portion is
not based on the applicable LIBOR Based Rate
for the requested LIBOR Based Rate Interest
Period.
(iii) Change in Applicable Laws, Regulations, etc.
If any Legal Requirement shall make it
unlawful for Lender to fund through the
purchase of U.S. dollar deposits any LIBOR
Portion, or otherwise to give effect to its
obligations as contemplated under this
subsection 2.6(B) or shall impose on Lender
any costs based on or measured by the excess
above a specified level of the amount of a
category of deposits or other liabilities of
Lender which includes deposits by reference
to which the LIBOR Based Rate is determined
as provided herein or a category of
extensions of credit or other assets of
Lender which includes any LIBOR Portion, or
shall impose on Lender any restrictions on
the amount of such a category of liabilities
or assets of Lender which includes any LIBOR
Portion, or shall impose on Lender any
restrictions on the amount of such a
category of liabilities or assets which
Lender may hold, (i) Lender may by notice
thereof to Xxxxxx prospectively terminate
the LIBOR Option, with respect to Loans made
or to be made by Lender, (ii) any LIBOR
Portion of Lender's Loans subject thereto
shall immediately bear interest thereafter
at the Prime Based Rate payable on the dates
provided in subsection 2.6(E)(1), and (iii)
Borrower shall indemnify Lender against any
loss, penalty or expense incurred by Lender
by reason of the liquidation or redeployment
of deposits or other funds acquired by
Lender to fund or maintain such LIBOR
Portion.
(iv) Taxes. It is the understanding of Borrower
and Lender that Lender shall receive
payments of amounts of principal of and
interest on the Note with respect to LIBOR
Portions from time to time subject to a
LIBOR Option free and clear of, and without
deduction for, any Taxes. If (i) Lender
shall be subject to any such Tax in respect
of any such LIBOR Portion or any part
thereof or (ii) Borrower shall be required
to withhold or deduct any such Tax from any
such amount, the LIBOR Based Rate applicable
to such LIBOR Portion shall be adjusted by
Lender to reflect all additional costs
incurred by Lender in connection with the
payments by Lender or the withholding by
Borrower of such Tax and Borrower shall
provide Lender with a statement detailing
the amount of any such Tax actually paid by
Borrower. Determination by Lender of the
amount of such costs shall, in the absence
of manifest error,
be conclusive, and at Borrower's request,
Lender shall demonstrate the basis of such
determination. If after any such adjustment,
any part of any Tax paid by Lender is
subsequently recovered by Lender, Lender
shall reimburse Borrower to the extent of
the amount so recovered. A certificate of an
officer of Lender setting forth the amount
of such recovery and the basis therefor
shall, in the absence of manifest error, be
conclusive.
(C) Default Rate of Interest. Upon and after the occurrence of a
Default and during the continuation thereof, the principal amount of the Loan
then outstanding shall bear interest, calculated daily (computed on the actual
days elapsed over a year of 360 days), at a fluctuating rate per annum equal to
(i) three percent (3%) above the Prime Based Rate (the "Default Base Rate").
(The rate of interest calculated pursuant to this subsection 2.6(C) shall be
referred to herein as the "Post Default Rate").
(D) Maximum Interest. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under the Note and charged
or collected pursuant to the terms of this Agreement or pursuant to the Note
exceed the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that such a court determines that Lender has charged or received interest
hereunder in excess of the highest applicable rate, the rate in effect hereunder
shall automatically be reduced to the maximum rate permitted by applicable law
and Lender shall promptly refund to Xxxxxx any interest received by Lender in
excess of the maximum lawful rate or, if so requested by Xxxxxx, shall apply
such excess to the principal balance of the Liabilities. It is the intent hereof
that Borrower not pay or contract to pay, and that Lender not receive or
contract to receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may be paid by Borrower under applicable law.
(E) Payments. Except where evidenced by notes or other instruments
issued or made by Borrower to Lender specifically containing payment provisions
which are in conflict with this subsection 2.6(E) (in which event the
conflicting provisions of said notes or other instruments shall govern and
control), that portion of the Loan consisting of:
(1) Interest accrued on the Prime Portion shall be due on
the earliest of (i) the first day of each Fiscal
Quarter (for the immediately preceding Fiscal
Quarter), computed through the last calendar day of
the preceding Fiscal Quarter, (ii) the occurrence of
a Default as a consequence of which Lender elects to
accelerate the maturity and payment of the
Liabilities or (iii) termination of this Agreement
pursuant to subsection 2.8 hereof; provided, however,
the Borrower hereby irrevocably authorizes Lender, in
Lender's sole discretion, to charge Borrower's demand
deposit account with Lender, a sum sufficient each
Fiscal Quarter to pay all interest accrued on the
Prime Portion during the immediately preceding month.
(2) Interest on the LIBOR Portion shall be due on the
earliest of (i) the last day of each LIBOR Based Rate
Interest Period relating to such LIBOR Portion (but
in no event less often than on the first day of each
Fiscal Quarter), (ii) the occurrence of a Default in
consequence of which Lender elects to accelerate the
maturity and payment of the Liabilities, or (iii)
termination of this Agreement pursuant to subsection
2.8, provided, however, that Borrower irrevocably
authorizes Lender, in Lender's sole discretion, to
charge Borrower's demand deposit account with Lender
at the termination of each LIBOR Based Rate Interest
Period, a sum sufficient to pay all interest accrued
and payable with respect to each LIBOR Portion.
(3) Reasonable costs, fees and expenses payable pursuant
to this Agreement shall be payable to Lender by
Borrower within five (5) Business Days after written
notice from Lender, to Xxxxxx or to such other Person
designated in writing by Xxxxxx.
(F) Number of Portions: At no time shall there exist more than
six (6) separate LIBOR Portions during the Term.
(G) Fee Reimbursement. Borrower shall reimburse Lender, whether or not
the Loan is funded, an amount not to exceed Seven Thousand Dollars ($7,000.00)
for Lender's reasonable costs and expenses, including, but not limited to
attorney's fees, and due diligence search costs and fees.
(H) Unused Commitment Fee. Beginning on the first anniversary of the
date of this Agreement and throughout the Term, the Borrower shall pay to Lender
a fee (the "Unused Commitment Fee") on the last day of each Fiscal Quarter
beginning with the Fiscal Quarter ending on June 30, 2002, equal to one eighth
of one percent (1/8%) per annum of the face amount of the average daily unused
Maximum Facility that exceeds Five Million Dollars ($5,000,000.00) during such
Fiscal Quarter. The Unused Commitment Fee shall be computed on the basis of a
360-day year for the actual number of days elapsed.
2.7 Method for Making Payments. All payments of principal and interest
hereunder shall be paid by automatic debit, wire transfer, check or in coin or
currency which, at the time or times of payment, is the legal tender for public
and private debts in the United States of America and shall be made at such
place as Lender or the legal holder or holders of the Note may from time to time
appoint in the payment invoice or otherwise in writing, and in the absence of
such appointment, then at the offices of Lender at 000 Xxxxx XxXxxxx Xxxxxx,
00xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000. Payment made by check shall be deemed paid
on the date Lender receives such check; provided, however, that if such check is
subsequently returned to Lender unpaid due to insufficient funds or otherwise,
the payment shall not be deemed to have been made and shall continue to bear
interest until collected. Notwithstanding the foregoing, the final payment due
hereunder must be made by wire transfer or other final funds. If requested by
Xxxxxx, interest, principal payments and any fees and expenses owed Lender from
time to time will be deducted by Lender automatically on the due date from the
designated Borrower's account with Lender, as
designated in writing by Xxxxxx. Borrower will maintain sufficient funds in the
account on the dates Lender enters debits authorized under the Note. If there
are insufficient funds in the account on the date Lender enters any debit
authorized by the Note, the debit will be reversed. Xxxxxx may terminate this
direct debt arrangement at any time by sending written notice to Lender at the
address specified above.
2.8 Maturity, Term.
(A) Loan Maturity. The Loan, including the full outstanding principal
balance thereon and all accrued and then unpaid interest thereon, if not sooner
paid, shall be immediately due and payable without notice or demand on March 27,
2006 (the "Loan Maturity Date").
(B) Termination. This Agreement shall terminate at the end of the Term;
provided, however, that the Lender shall retain the right to terminate this
Agreement sooner at any time upon the occurrence and only during the continuance
of a Default; and further provided, however, that notwithstanding any such
termination (i) all of the Lender's rights and remedies under this Agreement and
(ii) the Borrower's Negative Pledge pursuant to subsection 5.1 herein shall
survive such termination until all of the Liabilities have been fully paid and
satisfied. Notwithstanding the foregoing, Xxxxxx may by written notice to Lender
terminate this Agreement at any time as provided above conditioned upon and
subject to the prior payment by Borrower to Lender of all then outstanding
principal and accrued interest and payment and performance of all other
Liabilities. Upon the effective date of termination of this Agreement, all of
the Liabilities (other than contingent and indemnity obligations) shall become
immediately due and payable without notice or demand. Notwithstanding any
termination, until all of the Liabilities shall have been fully paid and
satisfied and all Loan Documents between the Borrower and the Lender shall have
been terminated, all of the Lender's rights and remedies under this Agreement
and the other Loan Documents shall survive, and the Borrower shall continue to
be obligated under the Negative Pledge contained herein in and to all existing
and future Negative Pledge Assets, as hereinafter defined.
3. REPORTING AND ELIGIBILITY REQUIREMENTS.
--------------------------------------
3.1 Account Warranties. Borrower warrants and represents to the Lender
that: (i) to Borrower's knowledge, the Accounts are genuine, are in all respects
what they purport to be, and are not evidenced by a judgment; (ii) the Accounts
represent undisputed, bona fide transactions the performance of which has been
completed by the Borrower; (iii) the amounts shown on the Borrower's books and
records and all invoices and statements actually and absolutely owing to the
Borrower and are not in any way contingent; (iv) to the best of Borrower's
knowledge, there are no setoffs, counterclaims or disputes and the Borrower has
not made any agreement with any Account Debtor for any deduction therefrom
except returns, discounts or allowances for prompt payment allowed by the
Borrower in the ordinary course of its business which are not likely to result
in any material adverse change in Borrower's financial condition or business
operations; (v) to the best of Borrower's knowledge, there are no facts, events
or occurrences known to the Borrower which in any way impair the validity or
enforcement thereof or tend to reduce the amount payable thereunder as shown on
the Borrower's books and records; (vi) to the Borrower's
knowledge, and except to the extent of the allowance for doubtful Accounts shown
on the Financials, all Account Debtors have the capacity to contract and are
solvent; (vii) the services furnished and/or goods sold giving rise thereto are
not subject to any lien, claim, encumbrance or security interest except that of
the Lender and except as specifically permitted below; (viii) except to the
extent of the allowance for doubtful Accounts shown on the Financials, the
Borrower has no knowledge of any fact or circumstance which would tend to impair
the validity or collectibility thereof; and (ix) except to the extent of the
allowance for doubtful Accounts shown on the Financials, to the Borrower's
knowledge, there are no proceedings or actions which are threatened or pending
against any Account Debtor which are likely to result in any material adverse
change in such Account Debtor's financial condition. The Borrower agrees to
notify the Lender with respect to any Accounts with respect to which the
warranties in this subsection 3.1 are not true.
3.2 Verification of Accounts. The Lender shall have the right, at any
time or times hereafter, in the Lender's name or in the name of a nominee of the
Lender, to verify the validity, amount or any other matter relating to any
Accounts, by mail, telephone, telegraph or otherwise.
3.3 Account Covenants. The Borrower shall promptly upon the Borrower's
learning thereof: (i) inform the Lender in writing of any material delay in the
Borrower's performance of any of its material obligations to any Account Debtor
or of any assertion of any material claims, setoff or counterclaims by any
Account Debtor; (ii) furnish to and inform the Lender of all material adverse
information of which the Borrower obtains knowledge relating to the financial
condition of any Person who is then an Account Debtor as to open Accounts with a
face amount, in the aggregate, in excess of $1,000,000.00.
3.4 Inventory Warranties. With respect to Inventory scheduled, listed
or referenced in any report pursuant to subsection 7.1 herein, and to the extent
not otherwise stated herein, Borrower warrants in all material respects that (i)
it is located at one of the premises listed on Exhibit A1 or Exhibit A2 and is
not in transit or is subject to the Deposit Inventory System more fully
described on Schedule 3.4; (ii) it is not subject to a lien or security interest
whatsoever except for the Negative Pledge granted to Lender hereunder and except
as specifically permitted in subsection 8.1 below; and (iii) to the best of
Borrower's knowledge, it is of good and merchantable quality, free from any
defects which would materially adversely affect the market value of such
Inventory. Borrower agrees to notify Lender with respect to any of its Inventory
with respect to which the warranties in this subsection 3.4 are not true.
3.5 Inventory Records. The Borrower shall at all times hereafter
maintain a perpetual inventory, keeping correct and accurate records itemizing
and describing the kind, type, quality and quantity of Inventory, and Borrower's
cost therefor and daily withdrawals therefrom and additions thereto, all of
which records as prepared at the last inventory count in the normal course of
business, shall be available at the applicable Borrower's location without prior
notice, or at Xxxxxx'x location upon five (5) Business Days prior written notice
during Borrower's usual business hours at the request of any of Lender's
officers, employees or agents. Borrower shall continue to make cycle counts and
other physical counts of Inventory substantially as may be required by its
independent public accountants and by good accounting practices (and, following
the occurrence of a Default, Borrower shall make such additional counts as may
be reasonably
requested by Lender) and, upon Lender's request, promptly following any such
counts of inventory shall supply Lender with a report in a form and with such
specificity as may be reasonably satisfactory to Lender concerning such physical
count of the Inventory.
3.6 Safekeeping of Inventory and Inventory Covenants. The Lender shall
not be responsible for: (i) the safekeeping of the Inventory; (ii) any loss of
or damage to the Inventory; (iii) any diminution in the value of the Inventory;
or (iv) any act or default of any carrier, warehouseman, bailee, forwarding
agency or any other Person. All risk of loss, damage, destruction or diminution
in value of the Inventory shall be borne by Borrower. Except as expressly set
forth in this Agreement or pursuant to the Deposit Inventory System, no
Inventory shall, without Lender's prior written consent, be at any time or times
hereafter stored with a bailee, warehouseman, consignee or similar third party.
Except for the Deposit Inventory System, Borrower shall not sell any of its
Inventory on a xxxx-and-hold, guaranteed sale, sale-or-return, sale on approval
or consignment basis or any other basis subject to a repurchase obligation or
return right.
The Borrower shall not sell any of its Inventory on a xxxx-and-hold
basis if it would cause the aggregate outstanding amount of all Accounts arising
therefrom to exceed at any time $50,000.00 with respect to all such Account
Debtors. No Inventory shall be at any time or times hereafter stored with a
bailee, warehouseman, consignee or similar third party unless the Borrower first
(i) obtains the Lender's written consent as to the identity of such third party,
and (ii) furnishes to the Lender such agreements, instruments and documents as
the Lender shall in its sole discretion specify with respect to such stored
Inventory.
3.7 Third Party Goods. Borrower shall not hold or accept any Third
Party Goods, whether on a consignment basis or otherwise, except from a Person
approved by Lender, provided that, with respect to any other such Person, Lender
has (i) been furnished with an accurate description of the arrangements and
agreements (if not reduced to writing) with respect to such Third Party Goods,
together with true, correct and complete copies of any written instruments,
documents or agreements with respect thereto, and (ii) received an executed
intercreditor agreement from such Person in form and substance satisfactory to
Lender. If any of the arrangements or instruments, documents or agreements
referred to in this subsection 3.7 are amended, modified or supplemented,
Borrower promptly shall provide Lender with notice thereof and copies of such
amendment, modification or supplement. Schedule 3.7 attached hereto sets forth a
complete listing of all Persons now having an interest in any Third Party Goods.
Borrower shall take such action as Lender may from time to time require to
assure Lender that no Person storing any Third Party Goods with Borrower has any
interest in the Negative Pledge Assets.
4. CONDITIONS OF ADVANCES.
-----------------------
Notwithstanding any other provisions contained in this Agreement the
making of any Loan shall be conditioned upon the following:
4.1 Borrower's Written Request . (i ) as to any Prime Based Rate
Advance, the Lender shall have received by 12:00 Noon (Chicago time) on the
first (1st) Business Day prior to the date such advance is to be made, a written
request (or telephonic request promptly confirmed in writing) from an Authorized
Officer of Xxxxxx for such an advance specifying the principal amount thereof;
(ii) as to any LIBOR Based Rate Advance, Xxxxxx shall comply with subsection
2.6(B). In addition, prior to making any advance or loan, Lender shall have
received copies of all documents required to have been delivered to the Lender
pursuant to this Agreement (including, without limitation, subsections 5.2 and
7.1).
4.2 Financial Condition. No material adverse change, as determined by
the Lender in its sole discretion, in the financial condition or operations of
the Borrower shall have occurred (a) at any time or times subsequent to the most
recent annual financial statements provided pursuant to subsection 7.1(B) of
this Agreement and (b) prior to the receipt of the first of such statements, at
any time subsequent to receipt of the Financials.
4.3 No Default. There shall not have occurred any Default or an Event
of Default which is then continuing, nor shall any such Default or Event of
Default occur after giving effect to the advance or loan.
4.4 Representations and Warranties True and Correct. The
representations and warranties of Borrower contained in this Agreement shall be
true and correct in all material respects on and as of the date of any advance
or loan, as though made on and as of such date, except for any waivers thereof
expressly granted by an officer of Lender in writing delivered to Xxxxxx.
4.5 Other Requirements. The Lender shall have received, in form and
substance satisfactory to the Lender, all certificates, orders, authorities,
consents, affidavits, schedules, opinions, instruments, security agreements,
financing statements, mortgages and other documents which are required
hereunder, or which the Lender may at any time reasonably request.
4.6 Conditions as to Initial Advance. Prior to the initial loan made
hereunder, each of the conditions set forth on Exhibit D hereto shall be fully
performed in form and substance satisfactory to Lender and its legal counsel.
5. NEGATIVE PLEDGE.
----------------
5.1 Negative Pledge. Borrower shall not, and shall not permit any of
its Subsidiaries who are not parties hereto to create, incur, permit, or suffer
to exist any lien, pledge or negative pledge ("Negative Pledge") except for the
Negative Pledge made in favor of Lender herein and any Permitted Liens, upon the
following assets: (i) Borrower's Accounts; (ii) Borrower's Inventory; (iii) all
insurance proceeds of or relating to any of the foregoing; (iv) all of the
Borrower's books and records relating to the foregoing; (v) all accessions and
additions to, substitutions for, and replacements, products and proceeds of any
of the foregoing, whether now owned or hereafter acquired (collectively the
"Negative Pledge Assets").
5.2 Preservation of Negative Pledge Assets. The Borrower shall execute
and deliver to the Lender at any time or times at the request of the Lender, all
financing statements, instruments or other documents (and pay the cost of filing
or recording the same in all public offices deemed necessary by the Lender) as
the Lender may request, in a form satisfactory to the Lender, to preserve and
keep preserved the Negative Pledge granted by the Borrower to the Lender. Should
the Borrower fail to do so, the Lender is authorized to sign any such financing
statements as the Borrower's agent. The Borrower further agrees that, to the
extent permitted by law, a carbon, photographic, photostatic or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement.
5.3 Setoff. Borrower agrees that Lender has all rights of setoff and
banker's lien provided by applicable law and, in addition thereto, Borrower
agrees that at any time any Default exists, Lender may apply to the payment of
the Liabilities any and all balances, credits, deposits, accounts or moneys of
Borrower then or thereafter with Lender. Without limitation of the foregoing,
Borrower agrees that, upon the occurrence and during the continuance of a
Default, Lender and each of its branches and offices is hereby authorized, at
any time and from time to time, without notice, (i) to setoff against, and to
appropriate and apply to the payment of, the Liabilities (whether matured or
unmatured, fixed or contingent or liquidated or unliquidated) any and all
amounts owing by Borrower to Lender or any such office or branch of Lender
(whether matured or unmatured, and, in the case of deposits, whether general or
special, time or demand and however evidenced) and (ii) pending any such action,
to the extent necessary, to hold such amounts as collateral to secure such
Liabilities and to return as unpaid for insufficient funds any and all checks
and other items drawn against any deposits so held as Lender may elect in its
sole discretion exercised in Good Faith.
6. WARRANTIES ETC.
--------------
Each Borrower jointly and severally represents, warrants and agrees,
except to the extent not applicable to such Borrower that, as of the date hereof
and each day thereafter, continuing so long as the Liabilities remain
outstanding, and (even if there shall be no Liabilities outstanding) so long as
this Agreement remains in effect:
6.1 Existence. (i) Xxxxxx is a corporation, duly organized and in good
standing under the laws of the State of Delaware and in good standing in
Illinois and all other states where the nature and extent of the business
transacted by it or the ownership of its assets makes such qualification
necessary, except for those jurisdictions in which the failure so to qualify
would not, in the aggregate, have a material adverse effect on Xxxxxx'x
financial condition, results of operations or business or the ability of Xxxxxx
to perform its obligations hereunder; (ii) each Subsidiary listed on Schedule
6.12 is the business entity type as indicated on Schedule 6.12, duly organized
and in good standing under the laws of the state or country of its organization
and all other states or countries where the nature and extent of the business
transacted by it, or the ownership of its assets makes such qualification
necessary, except for those jurisdictions in which the failure so to qualify
would not, in the aggregate, have a material adverse effect on such Subsidiary's
financial condition, results of operations or business or the ability of such
Subsidiary to perform its obligations hereunder.
6.2 Entity Authority. The execution and delivery by each Borrower
hereunder of this Agreement and all of the other Loan Documents executed by it
and the performance of the Borrower's obligations hereunder and thereunder: (i)
are within the Borrower's corporate, company or other entity powers; (ii) are
duly authorized by the Borrower's Directors, Managers or the equivalent, and, to
the extent required, Shareholders, Members, Partners or the equivalent; (iii)
are not in contravention of the terms of the Borrower's Articles of
Incorporation and by-laws, Articles of Organization and Operating Agreement, or
other such similar entity formation and operating agreement, or of any
indenture, or other material agreement or undertaking to which the Borrower is a
party or by which the Borrower or any of its property is bound or any judgment,
decree or order applicable to Borrower; (iv) do not, as of the execution hereof,
require the Borrower to obtain any governmental consent, registration or
approval; (v) do not contravene any contractual or governmental restriction
binding upon the Borrower; and (vi) will not, except as contemplated herein,
result in the imposition of any lien, charge, security interest or encumbrance
upon any property of the Borrower under any existing indenture, mortgage, deed
of trust, loan or credit agreement or other material agreement or instrument to
which the Borrower is a party or by which it or any of its property may be bound
or affected.
6.3 Binding Effect. This Agreement and all of the other Loan Documents
to which each Borrower is a party are the legal, valid and binding obligations
of such Borrower and are enforceable against such Borrower, as applicable, in
accordance with their respective terms.
6.4 Financial Data. Xxxxxx has furnished to the Lender consolidated
financial statements as of December 31, 1999 and consolidated financial
statements as of various dates subsequent to December 31, 1999, including,
without limitation, financial statements as of September 30, 2000 (collectively,
the "Financials"). The Financials are, and all financial statements to be
furnished to the Lender in accordance with subsection 7.1 below will be, in
accordance with the books and records of the Borrower and fairly present, and,
as to all financial statements to be furnished to the Lender in accordance with
subsection 7.1 below, will fairly present, the financial condition of the
Borrower at the dates thereof and the results of operations for the periods
indicated (subject, in the case of unaudited financial statements, to normal
year-end adjustments), and such Financials and financial statements have been
and will be prepared in conformity with generally accepted accounting principles
consistently applied throughout the periods involved. Since the date of the
Financials, there have been no changes in the condition, financial or otherwise,
of the Borrower as shown on such Financials, except (a) as expressly
contemplated herein, and (b) for changes in the ordinary course of business
(none of which individually or in the aggregate has been materially adverse).
All information, reports and other papers and data to be furnished to the Lender
are or will be, at the time the same are so furnished to the Lender, accurate
and correct in all material respects and complete insofar as completeness may be
necessary to give the Lender a true and accurate knowledge of the subject matter
thereof.
6.5 Negative Pledge Assets. Except as expressly permitted by
subsections 8.1 and 8.17, all of the Borrower's Negative Pledge Assets are and
will continue to be owned by the Borrower (except for Goods and Inventory sold
in the ordinary course of Borrower's business), have been or will (in the
ordinary course of Borrower's business) be fully paid for and are free and clear
of all security interests, liens, pledges, negative pledges, claims and
encumbrances,
except the Negative Pledge in favor of Lender and Permitted Liens, as set forth
on Schedule 6.5 hereto. The Negative Pledge Assets are located at the locations
set forth on Exhibit A1 or Exhibit A2 attached hereto, except for Inventory in
transit or at processors or packagers in conformity with the terms of the
Agreement and the Inventory sold through the Deposit Inventory System which is
located at Borrower's Customer's locations.
6.6 Solvency. As of the date hereof after giving effect to the
transaction contemplated herein, Xxxxxx (i) is not "insolvent" as that term is
defined in Section 101(32) of the Federal Bankruptcy Code (the "Bankruptcy
Code") (11 U.S.C. ss. 101(32)), Section 2 of the Uniform Fraudulent Transfer Act
("UFTA") or Section 2 of the Uniform Fraudulent Conveyance Act ("UFCA"); (ii)
does not have "unreasonably small capital," as that term is used in Section 548
(a) (2) (B) (ii) of the Bankruptcy Code or Section 5 of the UFCA; (iii) is not
engaged or about to engage in a business or a transaction for which its
remaining property is "unreasonably small" in relation to the business or
transaction as that term is used in Section 4 of the UFTA; (iv) is able to pay
its debts as they mature or become due in the ordinary course within the meaning
of Section 548(a) (2)(B) (iii) of the Bankruptcy Code, Section 4 of the UFTA and
Section 6 of the UFCA; and (v) now owns assets having a value both at "fair
valuation" and at "present fair salable value" greater than the amount required
to pay Xxxxxx'x "debts" in the ordinary course as such terms are used in Section
2 of the UFTA and Section 2 of the UFCA. Xxxxxx shall not be rendered insolvent
(as defined above) by the execution and delivery of this Agreement on March 27,
2001, or any of the other Loan Documents or by the transactions contemplated
hereunder or thereunder.
6.7 Chief Place of Business. As of the execution hereof, the principal
place of business and chief executive office of Xxxxxx is located at the address
set forth above in the preamble to this Agreement and of each Subsidiary at the
address set forth in Schedule 6.12. If any change in such locations occur,
Xxxxxx shall promptly notify the Lender thereof in accordance with subsection
10.17 hereof. As of the execution hereof, the books and records of each Borrower
and all records of account are located at Xxxxxx'x, or the principal place of
business and chief executive office of such Borrower, and if any change in such
location occurs, Xxxxxx shall promptly notify the Lender thereof in accordance
with subsection 10.17 hereof.
6.8 Other Corporate Names. Except as disclosed on Schedule 6.8 attached
hereto, the Borrower has not used any corporate or fictitious name other than
the names shown for Xxxxxx and certain of the Subsidiaries on Schedule 6.12.
6.9 Tax Liabilities. The Borrower has filed all federal, state and
local tax reports and returns required by any law or regulation to be filed by
it except those for which extensions have been duly obtained. The Borrower has
either duly paid all taxes, duties and charges indicated due on the basis of
such returns and reports, other than those being contested in good faith and
except as set forth in Schedule 6.9 or has made adequate provision for the
payment thereof, and the assessment of any material amount of additional taxes
in excess of those paid and reported is not reasonably expected. No federal
income tax returns of Borrower have been audited by the Internal Revenue Service
other than audits which did not have a material adverse effect on Borrower. The
reserves for taxes, if any, reflected on the Financials constitute, and the
consolidated balance sheets of the Borrower submitted to the Lender in
accordance with the
terms of subsection 7.1 below will constitute, reasonable estimations of the
amount necessary for the payment of all liabilities for all federal, state and
local taxes (whether or not disputed) of the Borrower accrued through the date
of such balance sheets. There are no material unresolved questions or claims
concerning any tax liability of the Borrower.
6.10 Margin Security. The Borrower does not own any margin securities
and none of the loans advanced hereunder will be used for the purpose of
purchasing or carrying any margin securities or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase any margin
securities or for any other purpose not permitted by Regulation U of the Board
of Governors of the Federal Reserve System.
6.11 Survival of Warranties. All representations and warranties
contained in this Agreement or any of the other Loan Documents shall survive the
execution and delivery of this Agreement.
6.12 Subsidiaries. All of Borrower's Subsidiaries, including the
principal place of business and chief executive office thereof, are listed on
Schedule 6.12.
6.13 Litigation and Proceedings. Except as disclosed on Schedule 6.13
attached hereto, no judgments are outstanding against the Borrower nor is there
now pending or, to the best of the Borrower's knowledge after reasonably
diligent inquiry, threatened any litigation, contested claim, or governmental
proceeding by or against the Borrower except judgments and pending or threatened
litigation, contested claims and governmental proceedings set forth in and upon
Schedule 6.13 hereto that exceed $500,000 in the aggregate. To the best of
Borrower's knowledge, the amount of liability set forth on Schedule 6.13 as to
each suit listed thereon is the maximum amount of Borrower"s liability under
such suit.
6.14 Other Agreements. The Borrower is not in default under any
material contract, lease, or commitment to which it is a party or by which it is
bound except such defaults which are not likely to result in a materially
adverse effect on Borrower's financial condition or business operation. The
Borrower knows of no dispute regarding any contract, lease, or commitment which
is material to the continued financial success and well-being of the Borrower.
6.15 Employee Controversies There are no controversies pending or, to
the best of the Borrower's knowledge after diligent inquiry, threatened or
anticipated, between the Borrower and any of its employees, other than employee
grievances arising in the ordinary course of business which are not, in the
aggregate, material to the continued financial success and well-being of the
Borrower. The Borrower has no accrued and unpaid liability to any of its
employees arising under the Fair Labor Standards Act, as amended.
6.16 Compliance with Laws and Regulations.
(A) General Compliance The execution and delivery by the Borrower of
this Agreement and all of the other Loan Documents to which it is a party and
the performance of the Borrower's obligations hereunder and thereunder are not
in contravention of any law or laws
applicable to Borrower. The Borrower is in compliance in all material respects
with all laws, orders, regulations and ordinances of all federal, foreign, state
and local governmental authorities relating to the business operations and the
assets of the Borrower, except for laws, orders, regulations and ordinances the
violation of which would not, in the aggregate, have a material adverse effect
on the Borrower's financial condition, results of operations or business.
(B) Environmental Compliance. The operations of the Borrower comply in
all material respects with all applicable federal, state or local environmental,
health and safety statutes and regulations. The Borrower has not received notice
of any judicial or administrative proceeding alleging the violation of any
federal, state or local environmental, health or safety statute or regulation by
or pertaining to the Real Property, the Borrower or its property or operations
or stating that the Borrower is the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any hazardous or toxic waste, substance, material or constituent, or
other substance into the environment which has not been settled or resolved with
such governmental agency. Except as expressly set forth on Schedule 6.13 hereto,
the Borrower has not filed any notice under any federal or state law indicating
past or present treatment, storage or disposal of a hazardous waste or reporting
a spill or release of a hazardous or toxic waste, substance, material or
constituent, or other substance into the environment. Except as expressly set
forth on Schedule 6.13 hereto, the Borrower does not have any contingent
liability of which the Borrower has knowledge or reasonably should have
knowledge in connection with any release of any hazardous or toxic waste,
substance, material or constituent, or other substance into the environment.
6.17 Patents, Trademarks, Licenses, Etc. The Borrower possesses
adequate assets, licenses, patents, patent applications, copyrights, service
marks, trademarks, trademark applications, trade styles and trade names,
governmental approvals or other authorizations and other rights that are
necessary for the Borrower to continue to conduct its business as heretofore
conducted by it.
6.18 ERISA. Neither Xxxxxx nor any ERISA Affiliate of Xxxxxx maintains
or contributes to any Pension Plan other than a Pension Plan identified on
Schedule 6.18 attached hereto. Each Pension Plan which is intended to be a
qualified plan under Section 401(a) of the Internal Revenue Code has been
determined by the Internal Revenue Service to be so qualified and each trust
related to any such Pension Plan has been determined to be exempt from federal
income tax under subsection 501(a) of the Internal Revenue Code or will be
submitted to the Internal Revenue Service prior to the end of the remedial
amendment period. Except as otherwise disclosed on Schedule 6.18 attached
hereto, neither Xxxxxx nor any ERISA Affiliate of Xxxxxx maintains or
contributes to any employee welfare benefit plan within the meaning of
subsection 3(1) of ERISA which provides lifetime medical benefits to retirees.
Each Pension Plan has been administered in all material respects in accordance
with its terms and the terms of ERISA, the Internal Revenue Code and all other
statutes and regulations applicable thereto. Neither Borrower nor any ERISA
Affiliate of Borrower has breached in any material respect any of the
responsibilities, obligations or duties imposed on it by ERISA or regulations
promulgated thereunder with respect to any Pension Plan. No accumulated funding
deficiency (as defined in subsection 302(a) (2) of ERISA and Section 412(a) of
the Internal Revenue Code) exists in respect to any Pension Plan. Neither Xxxxxx
nor any ERISA Affiliate of Xxxxxx nor any
fiduciary of any Pension Plan which is not a Multiemployer Plan (i) has engaged
in a nonexempt "prohibited transaction" described in Section 406 of ERISA or
Section 4975 of the Internal Revenue Code which could result in any liability to
Borrower, or (ii) has taken any action which would constitute or result in a
Termination Event with respect to any Pension Plan which could result in any
liability to Borrower. Schedule B, if any, to the most recent annual report
filed with the Internal Revenue Service with respect to each Pension Plan has
been furnished to Lender and is complete and accurate; since the date of each
such Schedule B, there has been no material adverse change in the funding status
or financial condition of the Pension Plan relating to such Schedule B. Neither
Xxxxxx nor any ERISA Affiliate of Xxxxxx has incurred any liability to the PBGC
which remains outstanding. Neither Xxxxxx nor any ERISA Affiliate of Xxxxxx has
(i) failed to make a required contribution or payment to a Multiemployer Plan,
or (ii) made or expects to make a complete or partial withdrawal under
subsections 4203 or 4205 of ERISA from a Multiemployer Plan for which Xxxxxx or
any ERISA Affiliate of Xxxxxx has any liability which has not been satisfied.
Neither Xxxxxx nor any ERISA Affiliate of Xxxxxx has failed to make a required
installment under subsection (m) of Section 412 of the Internal Revenue Code or
any other payment required under Section 412 of the Internal Revenue Code on or
before the due date for such installment or other payment. Neither Xxxxxx nor
any ERISA Affiliate of Xxxxxx is required to provide security to a Pension Plan
under Section 401(a) (29) of the Internal Revenue Code due to a Pension Plan
amendment that results in an increase in current liability for the plan year.
The present value of the benefits of each Pension Plan of Borrower and each
ERISA Affiliate of the Borrower as of the last day of the year for such Plan, as
determined by such Pension Plan's independent actuaries, does not exceed the
aggregate value, as determined by such actuaries, of all assets under such
Pension Plan. Borrower is not required to contribute to any Multiemployer Plan.
No matter is pending relating to any Pension Plan before any court or
governmental agency. Borrower has given to Lender all of the following: copies,
if any, of each Pension Plan and related trust agreement (including all
amendments to such Plan and trust) in existence or committed to as of the date
hereof and the most recent summary plan description, actuarial report,
determination letter issued by the Internal Revenue Service and Form 5500 filed
in respect of each such Pension Plan; a listing of all of the Multiemployer
Plans with the aggregate amount of the most recent annual contributions required
to be made by Xxxxxx and all ERISA Affiliates of Xxxxxx to each such
Multiemployer Plan; copies of any information which has been provided to Xxxxxx
or any ERISA Affiliate of Xxxxxx regarding withdrawal liability under any
Multiemployer Plan and all collective bargaining agreements pursuant to which
such contributions are required to be made; and copies of each employee welfare
benefit plan within the meaning of subsection 3(l) of ERISA which provides
lifetime medical benefits to employees, the most recent summary plan description
for such plan and the aggregate amount of the most recent annual payments made
to terminated employees under each such plan.
6.19 Financial Condition. Since the date of the consolidated financial
statements of Xxxxxx, dated December 31, 1999 and the consolidated interim
statement dated September 30, 2000, there has been no material adverse change in
Borrower's financial condition, results of operations or business or in the
value of Borrower's Negative Pledge Assets.
6.20 Subordinated Debt. Borrower has no subordinated debt.
6.21 Officers and Directors. The officers and directors of Xxxxxx and
each Subsidiary are set forth on Schedule 6.21.
6.22 Certain Proceedings. There are no pending or, to the best of the
Borrower's knowledge upon due investigation, threatened eminent domain,
condemnation, special assessment or other governmental proceedings pertaining to
the Real Property which would have a material adverse effect on Borrower's
financial condition or business operations.
6.23 No Violations. Except as set forth in Schedule 6.13, The Borrower
has not received any written notice of, and has no actual knowledge of,
violations of any zoning, building, fire or health code statutes or ordinances
of any applicable governmental body existing upon the Real Property which have
not been corrected and which would have a material adverse effect on Borrower's
financial condition or business operations. Borrower's use of the Real Property
is consistent with and allowed by applicable zoning law.
6.24 Taxes. All real estate taxes for the Real Property which have
become due have been paid in full except any such taxes or charges which are
being diligently contested in good faith by appropriate proceedings and do not
cause a material adverse effect to Borrower's financial condition or business
operations.
6.25 Utilities. All water, sewer, gas, electric, telephone, drainage
and other utility equipment, facilities and services required or necessary for
the operation of Real Property for the business to be conducted by the Borrower
are installed and connected. To the best of the Borrower's knowledge, no fact,
condition or proceeding exists which would result in the termination or
impairment of the furnishing of such utility services to the Borrower and would
have a material adverse effect on Borrower's financial condition or business
operations.
7. AFFIRMATIVE COVENANTS.
---------------------
Each Borrower jointly and severally covenants and agrees, except to the
extent not applicable to such Borrower that, so long as any of the Liabilities
remain outstanding, and (even if there shall be no Liabilities outstanding) so
long as this Agreement remains in effect:
7.1 Financial Statements. Borrower shall keep proper books of record
and account in which full and true entries will be made of all dealings or
transactions of or in relation to the business and affairs of Borrower, in
accordance with GAAP. Xxxxxx shall cause to be furnished to Lender in accordance
with past practice consistently applied:
(A) Periodic Reporting. As soon as practicable, and in any event
within forty-five (45) days after the end of each Fiscal Quarter:
(i) consolidated statements of income, retained earnings
and cash flow of Borrower for such calendar month and
for the period from the beginning of the then current
Fiscal Year to the end of such Fiscal Quarter, and a
consolidated balance sheet of Borrower as of the end
of such Fiscal Quarter, setting forth in each case,
in comparative form, figures (1) in the
case of statements, for the corresponding periods in
the preceding Fiscal Year and (2) in the case of
balance sheets, as of a date one year earlier, all in
reasonable detail and certified as accurate by an
Authorized Officer pursuant to a certificate in the
form of Exhibit E attached hereto, subject to changes
resulting from normal year-end adjustments;
(ii) statements prepared in the ordinary course, if any,
in which the actual cash flow and income for such
Fiscal Quarter and for the period from the start of
the then current Fiscal Year to the end of such
Fiscal Quarter, and the actual balance sheets at the
end of such Fiscal Quarter (in each case as required
to be delivered pursuant to subsection 7.1(A) (i)
hereof are compared with the corresponding projected
statements of income and cash flow and balance sheets
for such periods and time furnished to Lender
pursuant to subsection 7.l (F) below, in each case in
the same format as the audited statements of income
and cash flow and the audited balance sheet;
(iii) (a) as reasonably requested by Lender, copies of
consolidated operating statements for such Fiscal
Quarter prepared by Borrower for internal use,
including, without limitation, statements of cash
flow, purchases and sales of inventory and other
similar data, and (b) a comparison of actual cash
flow and Capital Expenditures with amounts budgeted
for such Fiscal Quarter;
(iv) calculations setting forth the compliance with the
financial covenants set forth in subsection 8.14
hereof for the most recently completed Fiscal
Quarter; and
(v) in the event that any of the foregoing statements
indicate that Borrower has varied in any material
respect from any financial projections provided by
Borrower to Lender, upon Lender's reasonable request
a statement of explanation of such deviation from an
Authorized Officer;
(B) Annual. As soon as practicable and in any event within one hundred
and ten (110) days after the end of each Fiscal Year of Borrower, consolidated
statements of income, retained earnings and cash flow of Borrower for such
Fiscal Year, and a consolidated balance sheet of Borrower as of the end of such
Fiscal Year, setting forth in each case, in comparative form, corresponding
figures for the period covered by the preceding annual statement (in the case of
statements) and as of the end of the preceding Fiscal Year (in the case of
balance sheets), all in reasonable detail and reasonably satisfactory in scope
to Lender and audited by independent certified public accountants selected by
Xxxxxx and reasonably satisfactory to Lender, whose opinion shall be in scope
and substance reasonably satisfactory to Lender and, if reasonably requested by
Lender, Borrower shall cause such opinion to be addressed on its face to Lender
or to be the subject of a reliance letter from such accountants permitting
Lender to rely on the contents thereof as if prepared specifically for use by
Lender;
(C) Default Notices. As soon as practicable (but in any event not more
than five (5) Business Days after any Responsible Officer of Borrower obtains
knowledge of the occurrence of an event or the existence of a circumstance
giving rise to an Event of Default or a Default), notice of any and all Events
of Default or Defaults hereunder;
(D) List of Account Debtors. (i) Upon and during the continuance of an
Event of Default, within five (5) Business Days after the written request of
Lender, Borrower shall deliver to Lender its most current Accounts aging report;
(ii) upon a Default, within five (5) Business Days after the written request of
Lender, Borrower shall deliver to the Lender the names, addresses and phone
numbers of Borrower's Account Debtors;
(E) Other Defaults and Material Information. As soon as practicable
(but in any event not more than five (5) Business Days after any officer of
Borrower obtains knowledge of the occurrence of an event or the existence of a
circumstance giving rise to a Default or Event of Default under or a material
violation of any term hereunder, notice of any such Default, Event of Default or
violation, and immediately upon the receipt thereof, copies of any notices with
respect thereto and any other material correspondence or information relating
thereto shall be provided to Lender by Borrower;
(F) Budget. To the extent prepared by Borrower in the ordinary course
of business, or if reasonably requested in writing by Lender, Borrower shall (i)
prepare an annual budget for the next Fiscal Year, in reasonable detail (on a
fiscal month basis for the immediately succeeding Fiscal Year), and a detailed
statement of the methods and assumptions used in the preparation of such budget
or (ii) prepare a pro forma budget in the preparation for or investigation
regarding an acquisition;
(G) Letters from Accountants and Consultants. As soon as practicable
and in any event within ten (10) days of delivery to Xxxxxx, a copy of (i) to
the extent that such letters may from time to time be issued by Borrower's
independent certified public accountants, each "Management Letter" prepared by
Borrower's independent certified public accountants in connection with the
financial statements referred to in subsection 7.1(B) hereof and (ii) to the
extent that such letters may from time to time be issued by Borrower's
independent certified public accountants or other management consultants
(collectively, "Accounting Systems Letters"), any letter issued by Borrower's
independent certified public accountants or other management consultants with
respect to recommendations relating to Borrower's financial or accounting
systems or controls, and Borrower shall use its best efforts to cause each
Management Letter and Accounting Systems Letter to be either addressed to Lender
or accompanied by a reliance letter from such accountants permitting Lender to
rely on the contents of each of the above as if prepared specifically for use by
Lender (Borrower further agrees that upon Borrower's receipt of any Accounting
Systems Letters wherein such accountants or consultants have made
recommendations for improvements to Borrower's financial or accounting systems
or controls, Borrower promptly shall commence actions to correct any material
defects in such financial or accounting systems or controls unless Lender
otherwise consents or Borrower reasonably disagrees with the need for such
actions.);
(H) Other Information. With reasonable promptness, such other
business or financial data as Lender may reasonably request.
All financial statements delivered to Lender pursuant to the
requirements of this subsection 7.1 (except where otherwise expressly indicated)
shall be prepared in accordance with GAAP (subject in the case of interim
financial statements to the lack of footnotes and normal year-end adjustments)
consistently applied, except for changes therein with which the independent
certified public accountants issuing the opinion on the financial statements
delivered pursuant to subsection 7.1(B) hereof have previously concurred in
writing. Together with each delivery of financial statements required by
subsections 7.1(A) and 7.1(B) hereof, Xxxxxx shall deliver to Lender a
certificate of an Authorized Officer of Xxxxxx in the form attached hereto as
Exhibit E setting forth in such detail as is reasonably acceptable to Lender
calculations with respect to Borrower's compliance with each of the financial
covenants contained in this Agreement and stating that to the best knowledge of
the Authorized Officer upon due investigation there exists no Default or Event
of Default, or, if any Default or Event of Default exists, specifying the nature
and the period of existence thereof and what action Borrower proposes to take
with respect thereto.
Lender shall exercise reasonable efforts to keep such information, and
all information acquired as a result of any inspection conducted in accordance
with subsection 7.2 hereof, confidential, provided that Lender may communicate
such information (a) to any other Person in accordance with the customary
practices of commercial banks relating to routine trade inquiries, (b) to any
regulatory authority having jurisdiction over Lender, (c) to any other Person in
connection with Lender's sale of any participations in the Liabilities or
assignment of any rights and obligations of Lender under this Agreement and the
other Loan Documents, (d) to any other Person in connection with the exercise of
Lender's rights, prerogatives or performance hereunder or under any of the other
Loan Documents, (e) to any Person in any litigation in which Lender is a party,
or (f) to any Person if Lender believes in Good Faith that disclosure is
necessary or appropriate to comply with any applicable law, rule or regulation
or in response to a subpoena, order or other legal process or informal
investigative demand, whether issued by a court, judicial or administrative or
legislative body or committee or other governmental authority or (g) to any
agents, employees, attorneys, accountants or appraisers of the Lender.
Notwithstanding the foregoing, information shall not be deemed to be
confidential to the extent such information (i) was already lawfully in the
possession of Lender prior to such information being provided to Lender by
Borrower, (ii) is available in the public domain, (iii) becomes available in the
public domain other than as a result of unauthorized disclosure by Lender, or
(iv) is acquired from a Person not known by Lender to be in breach of an
obligation of secrecy to Borrower. Borrower authorizes Lender to discuss the
financial condition of Borrower with Borrower's independent certified public
accountants and agrees that such discussion or communication shall be without
liability to either Lender or Borrower's independent certified public
accountants and other professional representatives.
7.2 Inspection. The Lender, or any Person designated by the Lender in
writing, shall have the right, from time to time hereafter, to call at the
Borrower's place or places of business (or any other place where the Negative
Pledge Assets or any information relating thereto is kept or located) during
reasonable business hours upon three (3) Business Days prior written notice,
and, without hindrance or delay, (i) to inspect, audit, check and make copies of
and extracts from the Borrower's books, records, journals, orders, receipts and
any correspondence and other data relating to the Borrower's business or to any
transactions between the parties hereto, (ii) to make such verification
concerning the Negative Pledge Assets as the Lender may consider reasonable
under the circumstances, and (iii) to discuss the affairs, finances and business
of the Borrower with any officers, employees or directors of the Borrower. The
Borrower shall pay on demand all reasonable photocopying expenses incurred by
the Lender under this subsection 7.2.
7.3 Conduct of Business. Xxxxxx shall maintain its legal existence as a
Delaware Corporation, each Subsidiary shall maintain its legal existence as the
State or County entity type stated on Schedule 6.12, Borrower shall maintain in
full force and effect all material licenses, permits, authorizations, bonds,
franchises, leases, patents, contracts and other rights necessary for the
profitable conduct of its business, shall continue in, and limit its operations
to, the same general line of business as that presently conducted by it and
shall comply with all applicable laws and regulations of any federal, foreign,
state or local governmental authority, except for such laws and regulations the
violation of which would not, in the aggregate, have a material adverse effect
on the Borrower's financial condition, results of operations or business or the
Borrower's ability to perform its obligations.
7.4 Claims and Taxes. The Borrower agrees to indemnify and hold Lender
and each of its officers, directors, employees, attorneys and agents harmless
from and against any and all claims, demands, liabilities, losses, damages,
penalties, costs, and expenses (including without limitation reasonable
attorneys' and consultants' fees) relating to or in any way arising out of the
possession, use, operation or control of any of the Borrower's assets. The
Borrower agrees that it shall pay or cause to be paid all license fees, bonding
premiums and related taxes and charges, and shall pay or cause to be paid all of
Borrower's real and personal property taxes, assessments and charges and all of
Borrower's franchise, income, unemployment, use, excise, old age benefit,
withholding, sales and other taxes and other governmental charges assessed
against Borrower or payable by Borrower, at such times and in such manner as to
prevent any penalty from accruing or any lien or charge from attaching to its
property or the Real Property, provided that Borrower shall have the right to
contest in good faith, by an appropriate proceeding promptly initiated and
diligently conducted, the validity, amount or imposition of any such tax,
assessment or charge, and during the pendency of such good faith contest to
delay or refuse payment thereof, if (i) Borrower establishes adequate reserves
to cover such contested taxes, assessments or charges, and (ii) such contest
does not have a material adverse effect on Borrower's financial condition,
results of operations or business, the ability of Borrower to pay any of the
Liabilities, or the value to Lender of Borrower's Negative Pledge in the
Negative Pledge Assets.
7.5 The Lender's Costs and Expenses as Additional Liabilities. The
Borrower, agrees to reimburse the Lender promptly for all reasonable expenses
and fees paid or incurred in connection with the analysis, documentation,
negotiation and closing of the loans and other extensions of credit described
herein, including, without limitation, lien search, filing and recording fees
and the reasonable fees and expenses of the Lender's attorneys and paralegals
and consultants (whether such attorneys and paralegals are employees of Lender
or are separately engaged by Lender), whether such expenses and fees are
incurred prior to or after the date hereof. All costs and expenses incurred by
the Lender with respect to the negotiation, documentation, enforcement,
collection and protection of the Lender's interests in the collateral shall be
additional Liabilities of the Borrower to the Lender, payable on demand, repaid
as provided in subsection 2.6 hereof.
7.6 The Borrower's Liability Insurance. The Borrower shall maintain, at
its expense, such public liability and third party property damage insurance in
such amounts and with such deductibles as is acceptable to the Lender in its
reasonable discretion exercised in Good Faith.
7.7 The Borrower's Property Insurance and Business Interruption
Insurance. The Borrower shall, at its expense, maintain business interruption
insurance and keep and maintain its assets insured against loss or damage by
fire, theft, burglary, pilferage, loss in transit, explosion, spoilage and all
other hazards and risks and in such amounts as is ordinarily insured against by
other owners or users of such properties in similar businesses. All such
policies of insurance shall be in form and substance reasonably satisfactory to
the Lender, and the Borrower shall not amend or otherwise change any such
policies in any way which may materially adversely affect the Lender without the
prior written consent of the Lender. The Borrower shall deliver to the Lender a
certificate or other satisfactory evidence of each policy of insurance and
evidence of payment of all premiums therefor. If the Borrower, at any time or
times hereafter, shall fail to obtain or maintain any of the policies of
insurance required above or to pay any premium in whole or in part relating
thereto, then the Lender, without waiving or releasing any obligation or default
by the Borrower hereunder, may at any time or times thereafter (but shall be
under no obligation to do so) obtain and maintain such policies of insurance and
pay such premiums and take any other action with respect thereto which the
Lender deems advisable.
7.8 ERISA. Xxxxxx shall deliver to Lender, at Xxxxxx'x expense,
the following information as and when provided below:
(i) as soon as possible, and in any event within twenty
(20) days after Xxxxxx or an ERISA Affiliate of
Xxxxxx knows or has reason to know that a Termination
Event has occurred, a written statement of an
Authorized Officer of Xxxxxx describing such
Termination Event and the action, if any, which
Xxxxxx or such ERISA Affiliate of Xxxxxx has taken,
is taking or proposes to take with respect thereto,
and when known, any action taken or threatened by the
Internal Revenue Service ("IRS"), the Department of
Labor ("DOL") or PBGC with respect thereto;
(ii) as soon as possible, and in any event within thirty
(30) days, after Xxxxxx or an ERISA Affiliate of
Xxxxxx knows or has reason to know that a prohibited
transaction (defined in Section 406 of ERISA and
Section 4975 of the Internal Revenue code) has
occurred, a statement of an Authorized Officer of
Xxxxxx describing such transaction;
(iii) promptly after the filing thereof with the DOL, IRS
or PBGC, copies of each annual report, including
Schedule B thereto, filed with respect to each
Pension Plan;
(iv) promptly after the filing thereof with the IRS, a
copy of each funding waiver request filed with
respect to any Pension Plan and all communications
received by Xxxxxx or any ERISA Affiliate of Xxxxxx
with respect to such request;
(v) promptly upon the occurrence thereof, notification of
any increases in the benefits of any existing Pension
Plan or the establishment of any new Pension Plan or
the commencement of contributions to any Pension Plan
to which Xxxxxx or any ERISA Affiliate of Xxxxxx was
not previously contributing;
(vi) promptly upon, and in any event within ten (10)
Business Days after, receipt by Xxxxxx or an ERISA
Affiliate of Xxxxxx of the PBGC's intention to
terminate a Pension Plan or to have a trustee
appointed to administer a Pension Plan, copies of
each such notice;
(vii) promptly upon, and in any event within ten (10)
Business Days after, receipt by Xxxxxx or an ERISA
Affiliate of Xxxxxx of an unfavorable determination
letter from the IRS regarding the qualification of a
Pension Plan under Section 401(a) of the Internal
Revenue Code, copies of such letter;
(viii) promptly upon, and in any event within ten (10)
Business Days after receipt by Xxxxxx or an ERISA
Affiliate of Xxxxxx of a notice from a Multiemployer
Plan regarding the imposition of withdrawal
liability, copies of such notice; and
(ix) promptly upon, and in any event within twenty (20)
Business Days after either Xxxxxx or an ERISA
Affiliate of Xxxxxx fails to make a required
installment under subsection (m) of Section 412 of
the Code or any other payment required under Section
412 on or before the due date for such installment or
payment, a notification of such failure.
Xxxxxx shall, and shall cause each of its ERISA Affiliates to, (a) keep
in full force and effect any Pension Plans that are presently in existence or
may, from time to time, come into existence, (b) make contributions to all
Pension Plans in a timely manner and in a sufficient amount to comply with the
requirements of the Pension Plans, the Code and ERISA, (c) comply with all
requirements of ERISA and the Code which relate to all Pension Plans, and (d)
notify Lender immediately upon receipt by Xxxxxx or any of its ERISA Affiliates
of any notice of the institution of any proceeding or other action which may
result in the termination of any Pension Plan or where there may constitute a
Termination Event. Xxxxxx shall, and shall cause each of its ERISA Affiliates
to, make any and all payments to any Multiemployer Plan that Xxxxxx or any ERISA
Affiliate thereof may be required to make under any agreement relating to any
Multiemployer Plan or any law pertaining thereto, except for any such payments
being contested in good faith by appropriate proceedings.
7.9 Notice of Suit or Adverse Change in Business. The Borrower shall,
as soon as possible, and in any event within five (5) Business Days after any
Responsible Officer of the Borrower learns of the following, give written notice
to the Lender of: (i) any material proceeding(s) (including, without limitation,
litigation, arbitration or governmental proceedings) being instituted or
threatened to be instituted by or against the Borrower in any federal, state,
local or foreign court or before any commission or other regulatory body
(federal, state, local or foreign) which seeks an award against Borrower in an
amount in excess of $500,000 or would result in a materially adverse effect on
the financial condition or operation of business of Borrower; (ii) notice that
the Borrower's operations are in material noncompliance with requirements of
applicable federal, state or local environmental, health and safety statutes and
regulations; (iii) notice that the Borrower is subject to federal or state
investigation evaluating whether any material remedial action is needed to
respond to the release of any hazardous or toxic waste, substance or
constituent, or other substance into the environment; (iv) notice that any
material portion of the properties or assets of the Borrower or the Real
Property is subject to an Environmental Lien; (v) any material adverse change in
the business, assets or condition, financial or otherwise, of the Borrower; and
(vi) any changes in the locations of any Negative Pledge Assets from the
locations listed on Exhibit A1 or Exhibit A2 or otherwise permitted hereunder.
7.10 Supervening Illegality. If, at any time or times hereafter, there
shall become effective any amendment to, deletion from or revision, modification
or other change in any provision of any statute, or any rule, regulation or
interpretation thereunder or any similar law or regulation, affecting, in the
Lender's reasonable determination, the Lender's extension of credit described in
this Agreement or the selling of participations therein, the Borrower shall
either (i) pay to the Lender the then outstanding balance of the Liabilities
which are in violation thereof, and hold the Lender harmless from and against
any and all obligations, fees, liabilities, losses, penalties, costs, expenses
and damages of every kind and nature imposed upon or incurred by the Borrower by
reason of the Lender's failure or inability to comply with the terms of this
Agreement or any of the other Loan Documents as a result of, but only to the
extent of such change, or (ii) indemnify and hold the Lender harmless from and
against any and all obligations, fees, liabilities, losses, penalties, costs,
expenses and damages of every kind and nature imposed upon or incurred by the
Lender by reason of such amendment, deletion, revision, modification, or other
change as a result of, but only to the extent of such change. The obligations of
the Borrower under this subsection 7.10 shall survive payment of the Liabilities
and termination of this Agreement.
7.11 Environmental Laws. If the Borrower shall (a) receive notice that
any violation of any federal, state or local environmental law or regulation may
have been committed or is about to be committed by the Borrower which will have
a material adverse effect on Borrower's financial condition or business
operations, (b) receive notice that any administrative or judicial complaint or
order has been filed or is about to be filed against the Borrower alleging a
material violation of any federal, state or local environmental law or
regulation or requiring the Borrower to take any action in connection with the
material release of toxic or hazardous substances into the environment, or (c)
receive any notice from a federal, state, or local governmental agency or
private party alleging that the Borrower may be liable or responsible for any
material amount of costs associated with a response to or cleanup of a release
of a toxic or hazardous substance into
the environment or any damages caused thereby, the Borrower shall provide the
Lender with a copy of such notice within fifteen (15) days after the Borrower's
receipt thereof. Within fifteen (15) days after the Borrower has learned of the
enactment or promulgation of any federal, state or local environmental law/or
regulation which may result in any material adverse change in the condition,
financial or otherwise, of the Borrower, the Borrower shall provide the Lender
with notice thereof.
7.12 Lender as Depository. Xxxxxx shall continue to utilize Lender
as its depository and remittance point for funds received by Xxxxxx in the
ordinary course of business to the
extent so used as of the date hereof. Xxxxxx shall maintain sufficient balances
to cover the costs of account activity.
8. NEGATIVE COVENANTS.
------------------
Each Borrower jointly and severally covenants and agrees, except to the
extent not applicable to it that, so long as any of the Liabilities remain
outstanding, and (even if there shall be no Liabilities outstanding) so long as
this Agreement remains in effect (unless the Lender shall give its prior written
consent thereto):
8.1 Encumbrances. Except as set forth on Schedule 8.1 hereto, or
contemplated herein, the Borrower will not create, incur, assume or suffer to
exist any security interest, mortgage, pledge, negative pledge, lien or other
encumbrance of any nature whatsoever on the Negative Pledge Assets, other than:
(i) deposits under workmen's compensation, unemployment insurance, social
security and other similar laws, or to secure the performance of bids, tenders
or contracts (other than for the repayment of borrowed money) or to secure
indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure statutory obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business; (ii) the
liens and security interests in favor of Lender; (iii) liens which arise by
operation of law, other than Environmental Liens; and (iv) Permitted Liens as
set forth upon Schedule 6.5 hereto.
8.2 Indebtedness. Except as otherwise provided herein, Borrower shall
not create, assume, or become liable in any manner with respect to or permit to
exist any obligations or indebtedness in excess of Five Million Dollars
($5,000,000.00) without prior written notice to Lender.
8.3 Consolidations, Mergers or Acquisitions. Borrower shall not
recapitalize, consolidate with, merge with, or except for the Acquisition,
otherwise acquire all or substantially all of the assets or properties of any
other Person without prior written notice to Lender.
8.4 Investments or Loans. Borrower shall not make or permit to exist
investments or loans in or to any other Person, except (i) investments in
short-term direct obligations of the United States Government, (ii) investments
in negotiable certificates of deposit or other investment accounts (i.e. money
market accounts) issued by Lender, an affiliate of Lender or by
any other bank or financial institution satisfactory to Lender, in its
reasonable discretion, and payable to the order of Borrower or to bearer, (iii)
investments in commercial paper rated Al or Pl, (iv) advances to employees of
Borrower in the ordinary course of business to the extent that such advances do
not materially adversely affect Borrower's financial condition or operation of
business, (v) advances against commissions to independent sales agents of
Borrower in the ordinary course of business to the extent that such advances do
not materially adversely affect Borrower's financial condition or operation of
business, (vi) intercompany transfers between Xxxxxx and its Subsidiaries and
between Subsidiaries in the ordinary course of business to the extent that such
intercompany transfers do not materially adversely affect Borrower's financial
condition, operation of business or the financial covenants contained in Section
8.13 herein, (vii) the Acquisition and future acquisitions to the extent
permitted hereunder, (viii) Xxxxxx'x purchase of treasury stock, (ix) loans to
current employees or officers of Borrower as permitted pursuant to Section 8.6.
8.5 Guarantees. Except for obligations of other Persons not to exceed
$25,000 in the aggregate or as related to a relocation of an employee or
independent sales agent of Borrower, Borrower shall not guarantee, endorse or
otherwise in any way become or be responsible for obligations of any other
Person, whether by agreement to purchase the indebtedness of any other Person or
through the purchase of goods, supplies or services, or maintenance of working
capital or other balance sheet covenants or conditions, or by way of stock
purchase, capital contribution, advance or loan for the purpose of paying or
discharging any indebtedness or obligation of such other Person or otherwise,
except endorsements of negotiable instruments for collection in the ordinary
course of business.
8.6 Compensation to Officers and Others. Except for (a) advances and
reimbursements for travel and expenses to Borrower's officers, directors or
employees in the ordinary course of business, (b) reasonable salaries and
bonuses for all salaried personnel, officers, and directors, (c) payments
pursuant to existing agreements entered into by Borrower in the ordinary course,
(d) existing loans to officers and employees of Borrower, and (e) advances
permitted pursuant to Section 8.4, the Borrower shall not make any loans to or
pay any bonuses, fees or other amounts to any officers, directors, employees or
stockholders of the Borrower.
8.7 Issuance of Stock. Any Borrower except Xxxxxx shall not issue or
distribute any capital stock or other securities for consideration or otherwise
without the prior written consent of Lender.
8.8 Amendment of Articles of Incorporation, By-Laws; Company Name;
Places of Business. Borrower shall not amend its Articles of Incorporation,
Articles of Organization, or similar organizational documents or By-Laws,
operating agreements, or similar governing documents, without prior written
notice to Lender, and except that Borrower may amend its Articles of
Incorporation, Articles of Organization or similar organizational document to
effect a change in its company name or adopt assumed names, provided that
Borrower furnishes to Lender such financing statements executed by Borrower
which Lender may reasonably request prior to the filing of such amendment and
furnishes to Lender a copy of such amendment, certified by all appropriate
Secretaries of State or other state officials within ten (10) Business Days of
the date such amendment is filed with such Secretary of State. Borrower shall
not make
any change to the location of its principal place of business or chief executive
office unless prior to the effective date of such change in location, Borrower
delivers to Lender such financing statements executed by Borrower which Lender
may request to reflect such change in location. Borrower shall deliver such
other documents and instruments as Lender may request in connection with such
change in name or location within ten (10) Business Days of the effectiveness of
such change or Lender's request therefor.
8.9 Transactions with Subsidiaries and Affiliates. Borrower will not
enter into any transaction including, without limitation: (a) the making of any
loans to, or the payment of any bonuses, fees or other money to, any Affiliate,
and/or (b) the purchase, sale or exchange of property or the rendering of any
service to any Subsidiary or Affiliate except for (i) transactions permitted
under Section 8.4 or (ii) transactions in the ordinary course of and pursuant to
the reasonable requirements of Borrower's business and upon fair and reasonable
terms no less favorable to Borrower than Borrower would obtain in a comparable
arm's-length transaction with an unaffiliated person or corporation.
8.10 ERISA Violations. Borrower shall not:
(A) engage, or permit an ERISA Affiliate of Borrower to engage, in any
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Internal Revenue Code for which a class exemption is not available or a private
exemption has not been previously obtained from the DOL;
(B) permit to exist any accumulated funding deficiency for any Pension
Plan (as defined in subsection 302 of ERISA and Section 412 of the Internal
Revenue Code), whether or not waived;
(C) fail, or permit an ERISA Affiliate of Borrower to fail, to pay
timely required contributions or annual installments due with respect to any
Plan including without limitation any installments due with respect to any
waived funding deficiency to any Pension Plan;
(D) terminate, or permit an ERISA Affiliate of Borrower to terminate,
any Pension Plan which would result in any liability of Borrower or an ERISA
Affiliate of Borrower under Title IV of ERISA;
(E) fail, or permit an ERISA Affiliate of Borrower to fail, to pay to
any Pension Plan any required installment under section (m) of Section 412 of
the Internal Revenue Code or any other payment required under Section 412 of the
Internal Revenue Code on or before the due date for such installment or other
payment;
(F) amend, or permit an ERISA Affiliate of Borrower to amend, a Pension
Plan resulting in an increase in current liability for the plan year such that
either Borrower or an ERISA Affiliate of Borrower is required to provide
security to such Plan under Section 401(a) (29) of the Internal Revenue Code;
(G) permit any reportable event (as defined in Section 4043 of ERISA)
to occur;
(H) withdraw, or permit any ERISA Affiliate to withdraw, from any
Pension Plan during a plan year for which Borrower or any ERISA Affiliate is a
substantial employer with respect to such plan if Borrower or such ERISA
Affiliate would incur liability to the PBGC with respect to such plan under
Sections 4063 or 4064 of ERISA; or
(I) withdraw, or permit any ERISA Affiliate to withdraw, from any
Multiemployer Plan if a withdrawal liability would result to Borrower or any
ERISA Affiliate pursuant to Section 4201 of ERISA.
8.11 Fiscal Year. Borrower's Fiscal Year commences January 1 and ends
December 31 of each year. Borrower may change its Fiscal Year only with the
prior written consent of Lender.
8.12 Subsidiaries. Borrower shall not form or acquire any additional
Subsidiaries other than those listed on Schedule 6.12 without prior written
notice to Lender or to the extent that the formation or acquisitions of
additional Subsidiaries materially reduce the value of the Negative Pledge, or
Borrower's ability to repay the Loans.
8.13 Financial Covenants.
(A) Minimum Liquid Assets. Borrower collectively shall not permit
the sum of Borrower's Liquid assets at any time to be less than Seventy-Five
Million Dollars ($75,000,000).
(B) Minimum Shareholder Equity. Xxxxxx shall not permit its total
shareholder equity any time to be less than One Hundred Million Dollars
($100,000,000).
(C) Minimum Debt Service Coverage Ratio. The Debt Service Coverage
Ratio shall be calculated as of the end of each Fiscal Quarter during the Term
beginning with the Fiscal Quarter ending March 31, 2001 with respect to the one
(1) year period encompassing such fiscal quarter and the previous three fiscal
quarters then elapsed (i.e. for the Fiscal Quarter ending March 31, 2001, the
period subject to calculation shall include the Fiscal Quarter ending December
31, 2000, September 30, 2000, and June 30, 2000). The Borrower's Debt Service
Coverage Ratio shall not be less than 1.20 to 1.0.
(E) Maximum Indebtedness. Subject to the terms of this Agreement, the
Borrower shall not permit the sum of Borrower's Indebtedness at any time to
exceed One Hundred Million Dollars ($100,000,000).
8.14 Inventory Covenants. Except as permitted by subsection 3.6 or 3.7,
Borrower shall not sell any of the Inventory on a xxxx-and-hold, guaranteed
sale, sale-or-return, sale on approval or consignment basis or any other basis
subject to a repurchase obligation or return right (other than Borrower's
customary practice of accepting returns of Inventory within stated time periods
as such practice is now in effect as heretofore described to Lender). Except as
permitted by subsection 3.6 or 3.7, Borrower shall not hold any inventory of
others, whether on a consignment basis or otherwise.
8.15 Environmental. Borrower shall not fail to comply in any material
respect with all federal, state or local environmental laws and regulations,
including, without limitation, environmental, land use, occupational safety or
health laws, rules, regulations, requirements or permits in all jurisdictions in
which it, is or may at any time be doing business, including without limitation
the federal Resource Conservation and Recovery Act, the Federal Comprehensive
Environmental Response, Compensation and Liability Act, the Federal Clear Air
Act, the Federal Clean Water Act, and the Federal Occupational Safety and Health
Act, as the same may be amended from time to time; provided, however that
nothing contained in this subsection 8.16 shall prevent the Borrower from
contesting, in good faith by appropriate legal proceedings, any such law,
regulation, interpretation thereof or application thereof, provided, further,
that Borrower shall not fail to comply with the order of any court or other
governmental body of applicable jurisdiction relating to such laws unless
Borrower shall currently be prosecuting an appeal or proceedings for review and
shall have secured a stay of enforcement or execution or other arrangement
postponing enforcement or execution pending such appeal or proceedings for
review.
8.16 Disposal of Property. Borrower shall not sell, lease, transfer or
otherwise dispose of any of the Negative Pledge Assets to any Person, except for
sales of Inventory to customers in the ordinary course of business or the sale
of uncollectible Accounts to collection companies in the ordinary course of
business and for fair value.
9. DEFAULT, RIGHTS AND REMEDIES OF THE LENDER.
-------------------------------------------
9.1 Defaults. Each of the following Events of Default which occur while
any Liabilities remain outstanding and continues uncured for the applicable cure
period contained herein shall constitute a Default under this Agreement:
(A) Failure to pay interest in accordance with the terms of this
Agreement or the other Loan Documents upon the date that such payment is due and
such default shall continue for five (5) days after written notice to Xxxxxx;
(B) Failure to pay principal in accordance with the terms of this
Agreement or the other Loan Documents upon the date that such payment is due and
such default shall continue for five (5) days after written notice to Xxxxxx;
(C) Default by Borrower in the due observance or performance of any
non-monetary covenants, terms, provisions, agreements or conditions hereinbefore
or hereinafter contained in this Agreement or any other Loan Document, required
to be kept or performed or observed by Borrower, which default continues for
thirty (30) days after service of written notice thereof, provided that if in
Lender's reasonable judgment such breach cannot reasonably be cured within such
30-day period, the Borrower shall commence such cure and proceed to so cure in a
diligent manner and to complete such cure within sixty (60) days after service
of written notice thereof, provided further that such grace period shall not
apply, and a Default shall be deemed to have occurred promptly upon such breach,
if such breach may not, in Lender's reasonable determination, be cured by
Borrower during such thirty (30) day grace period;
(D) an Event of Default under any of the Loan Documents;
(E) any warranty or representation now or hereafter made by Borrower is
untrue or incorrect in any material respect when made, or any schedule,
certificate, statement, report, financial data, notice, or writing furnished at
any time by Borrower to Lender is untrue or incorrect in any material respect on
the date as of which the facts set forth therein are stated or certified or any
of the foregoing omits to state a fact necessary to make the statements therein
contained not misleading in any material respect;
(F) a judgment or order requiring payment in excess of $500,000.00
(except for judgments constituting liens and which are not a lien on the
Negative Pledge Assets, which are being contested by Borrower in good faith)
shall be rendered against Borrower and such judgment or order shall remain
unsatisfied or undischarged and in effect for ten (10) consecutive days without
a stay of enforcement or execution, provided that this subsection 9.1(F) shall
not apply to any judgment for which Borrower is fully insured (except for normal
deductibles in connection therewith) and with respect to which the insurer has
assumed the defense or is not defending under reservation of right and with
respect to which Lender reasonably believes the insurer will pay the full amount
thereof (except for normal deductibles in connection therewith);
(G) a notice of lien, levy or assessment is filed or recorded with
respect to the Negative Pledge Assets or all or a substantial part of the assets
of Borrower by the United States, or any department, agency or instrumentality
thereof, or by any state, county, municipality or other governmental agency, or
any taxes or debts owing at any time or times hereafter to any one or more of
them become a lien upon any part of Borrower's Negative Pledge Assets; and (i)
such lien, levy or assessment is not discharged or released or the enforcement
thereof is not stayed within thirty (30) days of the notice or attachment
thereof, or (ii) if the enforcement thereof is stayed, such stay shall cease to
be in effect, provided that this subsection 9.1(G) shall not apply to any liens,
levies or assessments which relate to current taxes not yet due and payable;
(H) there shall occur any loss, theft, substantial damage or
destruction of any item or items of Borrower's Negative Pledge Assets owned by
Borrower for which Borrower is not fully insured as required by this Agreement
or the other Loan Documents (a "Loss"), if the amount of such Loss not fully
covered by insurance (excluding any reasonable deductible amount in connection
therewith), together with the amount of all other Losses not fully covered by
insurance (excluding any deductibles in connection therewith) occurring in the
same Fiscal Year, exceeds $500,000.00;
(I) all or any part of Borrower's Negative Pledge Assets are attached,
seized, subjected to a writ or distress warrant, or is levied upon, or comes
within the possession of any receiver, trustee, custodian or assignee for the
benefit of creditors and on or before the thirtieth (30th) day thereafter such
assets are not returned to Borrower, and/or such writ, distress warrant or levy
is not dismissed, stayed or lifted;
(J) (1) a proceeding under any bankruptcy, reorganization, arrangement
of debt, insolvency, readjustment of debt or receivership law or statute is
filed (a) against Borrower and
an adjudication or appointment is made or order for relief is entered, or such
proceeding remains undismissed for a period in excess of sixty (60) days; or (b)
by Borrower; or (2) Borrower (x) makes an assignment for the benefit of
creditors; or (y) or Borrower takes any corporate action to authorize any of the
foregoing;
(K) Xxxxxx voluntarily or involuntarily dissolves or is dissolved,
terminates or is terminated or any other Borrower voluntarily or involuntarily
dissolves or is dissolved, terminates or is terminated without prior written
notice to Lender;
(L) Borrower, on a consolidated basis, becomes insolvent or fails
generally to pay its debts as they become due;
(M) Borrower is enjoined, restrained, or in any way prevented by the
order of any court or any administrative or regulatory agency from conducting
all or any material part of its business affairs on a consolidated basis, for a
period in excess of twenty-one (21) Business Days;
(N) a breach by Borrower shall occur under any material agreement,
document or instrument (other than an agreement, document or instrument
evidencing the lending of money), whether heretofore, now or hereafter existing
between Borrower and any other Person, and such breach, continues unwaived for
more than thirty (30) days after such breach first occurs, provided that if in
Lender's reasonable judgment such breach cannot reasonably be cured within such
30-day period, the Borrower shall commence such cure and proceed to so cure in a
diligent manner and to complete such cure within sixty (60) days after service
of written notice thereof, provided further that such grace period shall not
apply, and a Default shall be deemed to have occurred promptly upon such breach,
if such breach may not, in Lender's reasonable determination, be cured by
Borrower during such thirty (30) day grace period;
(O) as to more than $500,000.00 in indebtedness in the aggregate at any
time (i) Borrower shall fail to make any payment due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) on any other
obligation for borrowed money and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such indebtedness; (ii) any other default under any agreement or
instrument relating to any such indebtedness, or any other event, shall occur
and shall continue after the applicable grace period, if any, specified in such
agreement or instrument if the effect of such default or event is to accelerate,
or to permit the acceleration of, the maturity of such indebtedness; or (iii)
any such indebtedness shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled required prepayment) prior to the
stated maturity thereof;
(P) a material and adverse change shall occur (i) in the present or
reasonably foreseeable prospective operations or financial condition of Borrower
or in the value of any material portion of the Negative Pledge Assets, or (ii)
which materially impairs the ability of Borrower to perform Borrower's
obligations under this Agreement and the other Loan Documents, in each case as
determined by Lender in its sole Good Faith discretion;
(Q) the plan administrator of any Pension Plan applies under Section
412(d) of the Internal Revenue Code for a waiver of the minimum funding
standards of Section 412(a) of the Internal Revenue Code and Lender in good
faith believes that the approval of such waiver could subject Borrower or an
ERISA Affiliate of Borrower to liability in excess of Five Hundred Thousand
Dollars ($500,000.00).
(R) an accumulated funding deficiency (as defined in Section 203 of
ERISA and Section 412 of the Code) exists with respect to any Pension Plan as of
the last day of any plan year;
(S) as of the last day of any plan year, the present value of the
benefits under any Pension Plan, as determined by such Plan's independent
actuaries, exceeds the value as of such date, as determined by such actuaries,
of all assets of such Plan by Five Hundred Thousand Dollars ($500,000.00);
(T) the aggregate present value of the benefits under all Pension Plans
that do not satisfy clause (S) above, as of the end of each Plan's plan year, as
determined by such Plans' independent actuaries, exceeds the aggregate value as
of such date, as determined by such actuaries of all assets of all such Pension
Plans by Five Hundred Thousand Dollars ($500,000.00);
(U) a Termination Event occurs which Lender in good faith believes
could individually, or together with any other Termination Event subject either
Borrower or an ERISA Affiliate of Borrower to liability in excess of Five
Hundred Thousand Dollars ($500,000.00); or
(V) except as otherwise specifically permitted herein, any sale,
conveyance, assignment or other transfer of, or grant of a security interest,
pledge or negative pledge in, all or any part of the title to the Negative
Pledge Assets other than to Lender;
(W) a Change in Control without the written consent of Lender provided,
however, that a Change in Control shall be permitted if written notice of the
intended sale, conveyance, assignment or other transfer of or grant of security
interest in one or more shares of the capital stock of Xxxxxx that causes the
Change in Control is given to Lender and if such sale, conveyance, assignment or
transfer is to (i) a member of the Immediate Family of the assigning
Shareholder, or (ii) a trust, partnership or other entity for the benefit of the
assigning Shareholder or his Immediate Family, including but not limited to Port
Investment LLP, a Delaware Limited Liability Partnership. (In the event of a
permitted transfer of capital stock in Xxxxxx hereunder Lender shall be provided
written notice thereof at least five (5) Business Days prior to such transfer.)
Upon the occurrence of any of the foregoing Defaults, Lender may,
without notice to Borrower (i) terminate Lender's obligation to make advances to
Borrower and/or (ii) deem all of the Liabilities immediately due and payable,
except that if an Event of Default described in subsection 9.1(I) hereof shall
exist or occur, all of the Liabilities shall automatically, without notice of
any kind, be immediately due and payable.
9.2 Rights and Remedies Generally. In the event of a Default, the
Lender shall have, in addition to any other rights and remedies contained in
this Agreement or in any of the other Loan Documents, all of the rights and
remedies of an unsecured party under the Code or other applicable laws, all of
which rights and remedies shall be cumulative, and non-exclusive, to the extent
permitted by law.
9.3 Waiver of Demand. Demand, presentment, protest and notice of
nonpayment are hereby waived by the Borrower. The Borrower also waives the
benefit of all valuation, appraisal and exemption laws.
10. MISCELLANEOUS
-------------
10.1 Waiver. Lender's failure, at any time or times hereafter, to
require strict performance by Borrower of any provision of this Agreement shall
not waive, affect or diminish any right of Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver by Lender of a
Default by Borrower under this Agreement or any of the other Loan Documents
shall not suspend, waive or affect any other Default by Borrower under this
Agreement or any of the other Loan Documents, whether the same is prior or
subsequent thereto and whether of the same or of a different kind or character.
None of the undertakings, agreements, warranties, covenants and representations
of Borrower contained in this Agreement or any of the other Loan Documents and
no Default by Borrower under this Agreement or any of the other Loan Documents
shall be deemed to have been suspended or waived by Lender unless such
suspension or waiver is in writing signed by an officer of Lender, and directed
to Borrower specifying such suspension or waiver. All Defaults shall continue
until the same are waived by Lender in accordance with the preceding sentence.
10.2 Costs and Attorneys' Fees. If at any time or times hereafter
Lender employs counsel in connection with protecting Lender's Negative Pledge in
the Negative Pledge Assets or in connection with any of Lender's other rights
contemplated by or arising out of this Agreement or any of the other Loan
Documents, whether (a) to prepare, negotiate or execute (i) any amendment to or
modification or extension of this Agreement, any other Loan Documents or any
instrument, document or agreement executed by any Person in connection with the
transactions contemplated by this Agreement, (ii) any new or supplemental Loan
Documents, or any instrument, document or agreement to be executed by any Person
in connection with the transactions contemplated by this Agreement, or (iii) any
instrument, document or agreement in connection with any sale or attempted sale
of any interest herein to any participant provided, however that prior to Lender
employing counsel for such purpose, Lender shall give Borrower sixty (60) days
advance written notice of such intent and Borrower may issue a Facility
Reduction Notice pursuant to Section 2.3 , (b) to commence, defend, or intervene
in any litigation with respect to the Negative Pledge, the Negative Pledge
Assets or the solvency of Borrower, or to file a petition, complaint, answer,
motion or other pleadings with respect to the Negative Pledge, the Negative
Pledge Assets or the solvency of Borrower, (c) to take any other action in or
with respect to any suit or proceeding (bankruptcy or otherwise), (d) to consult
with officers of Lender to advise Lender, (e) to the extent Lender has such
rights to protect, collect, lease, sell, take possession of, release or
liquidate any of the Negative Pledge Assets, or (f) to
attempt to enforce or to enforce any interest of Lender in any of the Negative
Pledge Assets, or to enforce any rights of Lender, including, without
limitation, Lender's rights to collect any of the Liabilities, then in any of
such events, all of the reasonable attorneys' fees arising from such services,
and any expenses, costs and charges relating thereto, including, without
limitation, all reasonable fees of all paralegals and other staff employed by
such attorneys, together with interest following demand for payment thereof at
the rate from time to time prescribed in subsection 2.6(C) hereof, shall be part
of the Liabilities, payable on demand and secured by the Negative Pledge Assets.
10.3 Expenditures by the Lender. In the event Borrower shall fail to
pay taxes, insurance, assessments, costs or expenses which Borrower is, under
any of the terms hereof, required to pay, or fails to keep the Negative Pledge
Assets free from other security interests, liens or encumbrances, except as
permitted herein, Lender may, in its sole discretion, make expenditures for any
or all of such purposes, and the amount so expended, together with interest
thereon at the rate prescribed in subsection 2.6(C) hereof, shall be part of the
Liabilities, payable on demand.
10.4 Custody and Preservation of Negative Pledge Assets. Lender shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Negative Pledge Assets in its possession if it takes such action for
that purpose as Borrower shall request in writing, but failure by Lender to
comply with any such request shall not of itself be deemed a failure to exercise
reasonable care, and no failure by Lender to preserve or protect any right with
respect to such Negative Pledge Assets against prior parties, or to do any act
with respect to the preservation of such Negative Pledge Assets not so requested
by Borrower shall of itself be deemed a failure to exercise reasonable care in
the custody or preservation of such Negative Pledge Assets.
10.5 Reliance by the Lender. All covenants, agreements,
representations, obligations and warranties made herein by Borrower shall be
joint and several, notwithstanding whether the proceeds of the Loan are paid to
Borrower and shall, notwithstanding any investigation by Lender, be deemed to be
material to and to have been relied upon by Lender.
10.6 Parties. Whenever in this Agreement there is reference made to any
of the parties hereto, such reference shall be deemed to include, wherever
applicable, a reference to the successors and assigns of Borrower and the
successors and assigns of Lender, and the provisions of this Agreement shall be
binding upon and shall inure to the benefit of said successors and assigns.
Notwithstanding anything herein to the contrary, the Borrower may not assign or
otherwise transfer its rights or obligations under this Agreement without the
prior written consent of Lender. Without in any way limiting Lender's rights,
Lender may sell participations in the Liabilities or sell or assign its rights
hereunder and under the other Loan Documents, in whole or in part, on such terms
as Lender may determine. In connection with any such proposed participations or
assignments, Lender may disclose information otherwise required to be kept
confidential hereunder provided such disclosure shall not be made unless the
party to whom it is disclosed shall have agreed to keep such information
confidential as set forth herein.
10.7 CHOICE OF LAW. THIS AGREEMENT SHALL BE DEEMED TO BE EXECUTED AND
HAS BEEN DELIVERED AND ACCEPTED IN CHICAGO, ILLINOIS BY SIGNING AND DELIVERING
IT THERE. ANY DISPUTE BETWEEN THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY,
OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS AND NOT THE
CONFLICTS OF LAW PROVISIONS OF THE STATE OF ILLINOIS.
10.8 CONSENT TO JURISDICTION.
-----------------------
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION 10.8(B)
HEREOF, LENDER AND BORROWER AGREE THAT ALL DISPUTES BETWEEN THEM ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT,
EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED
IN XXXX COUNTY, ILLINOIS, AND THE BORROWER AND THE LENDER WAIVE ANY OBJECTION
BASED ON VENUE OR FORUM NON CONVENIENCE WITH RESPECT TO ANY ACTION INSTITUTED
THEREIN, BUT THE LENDER AND THE BORROWERS ACKNOWLEDGE THAT CERTAIN APPEALS FROM
THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF XXXX COUNTY,
ILLINOIS. THE BORROWER WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO
THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. THE BORROWER AGREES THAT LENDER SHALL HAVE THE
RIGHT TO PROCEED AGAINST BORROWER OR THE BORROWER'S PROPERTY ("PROPERTY") IN A
COURT IN ANY LOCATION TO ENABLE LENDER TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER ENTERED IN FAVOR OF LENDER. BORROWER AGREES THAT IT WILL NOT ASSERT ANY
PERMISSIVE COUNTERCLAIM IN ANY PROCEEDING BROUGHT BY LENDER TO REALIZE ON
PROPERTY, NEGATIVE PLEDGE ASSETS OR ANY OTHER SECURITY FOR THE LIABILITIES, OR
TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. BORROWER THEREBY
WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH
LENDER HAS COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION 10.8(B).
10.9. SERVICE OF PROCESS. THE BORROWER HEREBY WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS UPON IT AND IRREVOCABLY APPOINTS XXXXX X. XXXXX, y
VEDDER, PRICE, XXXXXXX & KAMMHOLZ, 000 X. XXXXXXX, XXXXXXX, XXXXXXXX, 00000, AS
BORROWER'S AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE
STATE OF ILLINOIS. LENDER AGREES TO PROMPTLY FORWARD BY REGISTERED MAIL (NO
RETURN RECEIPT REQUIRED) A COPY OF ANY PROCESS SO SERVED UPON SAID AGENT TO
BORROWER AT ITS ADDRESS SET FORTH IN SUBSECTION 10.17 HEREOF. BORROWER HEREBY
CONSENTS TO SERVICE OF PROCESS AS AFORESAID.
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF THE
COURTS REFERRED TO IN SUBSECTION 10.8 HEREOF IN ANY SUCH ACTION OR PROCEEDING BY
MAILING COPIES OF SUCH SERVICE BY REGISTERED MAIL, POSTAGE PREPAID TO BORROWER
AT SAID ADDRESS. NOTHING IN THIS AGREEMENT SHALL AFFECT THE RIGHT OF LENDER TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW BUT ANY FAILURE TO RECEIVE
SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS.
10.10 WAIVER OF JURY TRIAL AND BOND.
-----------------------------
(A) WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER EACH WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN THE LENDER AND THE BORROWER ARISING OUT
OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS
OR IN ANY PROCEEDING REFERRED TO IN THE SECTIONS 10.8, 10.9 AND 10.10.
(B) WAIVER OF BOND. THE BORROWER WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF LENDER IN CONNECTION WITH ANY JUDICIAL PROCESS OR
PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON NEGATIVE PLEDGE
ASSETS OR ANY OTHER SECURITY FOR THE LIABILITIES, TO ENFORCE ANY JUDGMENT OR
OTHER COURT ORDER ENTERED IN FAVOR OF LENDER, OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER, PRELIMINARY OR PERMANENT INJUNCTION,
THIS AGREEMENT, OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN LENDER AND THE
BORROWER.
10.11 ADVICE OF COUNSEL. THE BORROWER ACKNOWLEDGES AND REPRESENTS
TO THE LENDER THAT IT DISCUSSED THIS AGREEMENT WITH ITS LAWYERS.
10.12 SEVERABILITY. WHEREVER POSSIBLE, EACH PROVISION OF THIS AGREEMENT
SHALL BE INTERPRETED IN SUCH 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 ONLY TO THE
EXTENT OF SUCH LAW, SUCH PROVISION SHALL BE INEFFECTIVE ONLY TO THE EXTENT OF
SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH
PROVISION OR THE REMAINING PROVISIONS OF THIS AGREEMENT.
10.13 Application of Payments. Notwithstanding any contrary provision
contained in this Agreement or in any of the other Loan Documents, Borrower
irrevocably waives the right to direct the application of any and all payments
at any time or times hereafter received by Lender
from Borrower or with respect to any of the Negative Pledge Assets, and Borrower
does hereby irrevocably agree that Lender shall have the continuing exclusive
right to apply and reapply any and all payments received at any time or times
hereafter, whether with respect to the Negative Pledge Assets or otherwise,
against the Liabilities in such manner as Lender may deem advisable,
notwithstanding any entry by Lender upon any of its books and records.
10.14 Marshalling; Payments Set Aside. The Lender shall be under no
obligation to xxxxxxxx any assets in favor of the Borrower or any other party or
against or in payment of any or all of the Liabilities. To the extent that the
Borrower makes a payment or payments to Lender or Lender enforces its security
interests or exercises its rights of set off, and such payment or payments or
the proceeds of such enforcement or set off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential set aside and/or required
to be repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or set off had not occurred.
10.15 Section Titles. The section titles contained in this Agreement
shall be without substantive meaning or content of any kind whatsoever and are
not a part of the agreement between the parties.
10.16 Continuing Effect. This Agreement, Lender's security interests in
the Negative Pledge Assets, and all of the other Loan Documents shall continue
in full force and effect so long as any Liabilities shall be owed to Lender, and
(even if there shall be no Liabilities outstanding) so long as this Agreement
has not been terminated as provided in subsection 2.8 hereof.
10.17 Notices. Except as otherwise expressly provided herein, any
notice required or desired to be served, given or delivered hereunder shall be
in writing, and shall be deemed to have been validly served, given or delivered
(i) three (3) days after deposit in the United States mails, with proper postage
prepaid, (ii) if sent before 5:00 p.m. CST or CSDT on a Business Day, then on
the date when sent after receipt of confirmation or answer back if sent by
telecopy, or other similar facsimile transmission and if sent after 5:00 p.m.
CST or CSDT on a Business Day or on a non-Business Day, then on the next
Business Day, (iii) one (1) Business Day after deposited with a reputable
overnight courier with all charges prepaid, or (iv) when delivered, if
hand-delivered by messenger, all of which shall be properly addressed to the
party to be notified and sent to the address or number indicated as follows:
(i) If to the Lender at: LASALLE BANK NATIONAL ASSOCIATION
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx, Vice President
Telephone: 312/000-0000
Facsimile: 312/904-5483
With a copy to: Xxxxx X. Xxxx, Esq.
Deutsch, Levy & Xxxxx, Chartered
000 Xxxx Xxxxxxxxxx Xxxxxx - Xxx. 0000
Xxxxxxx, XX 00000
Telephone: 312/000-0000
Fax: 312/000-0000
(ii) If to Borrower at: XXXXXX PRODUCTS, INC.
0000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, CEO
Telephone: 847/000-0000
Facsimile: 847/795-9030
with a copy of such notice to:
VEDDER, PRICE, XXXXXXX & KAMMHOLZ
000 Xxxxx XxXxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxx
Telephone: 312/000-0000
Facsimile: 312/609-5005
or to such other address or number as each party designates to the other in the
manner herein prescribed.
10.18 Equitable Relief. The Borrower recognizes that, in the event
Borrower fails to perform, observe or discharge any obligations or liabilities
under this Agreement, any remedy at law may prove to be inadequate relief to
Lender; therefore, the Borrower agrees that Lender, if Lender so requests, shall
be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages and the granting of any such
relief shall not preclude the Lender from pursuing any other relief or remedies
for such breach.
10.19 Indemnification. Borrower agrees to defend, protect, indemnify
and hold harmless Lender and each of its officers, directors, employees,
attorneys, consultants and agents (collectively, the "Indemnitees") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for and consultants of such Indemnitees in connection
with any investigative, administrative or judicial proceeding, whether or not
such Indemnitees shall be designated as parties thereto), which may be imposed
on, incurred by, or asserted against such Indemnitees (whether direct, indirect,
or consequential and whether based on any federal or state laws or other
statutory regulations, including, without limitation, securities, environmental
and commercial laws and regulations, under common law or at equitable cause or
on contract or otherwise) in any manner other Loan Documents, or any act, event
or transaction related or attendant thereto, the agreements of Lender contained
herein, the making of the Loans, the management of such Loans or the Negative
Pledge Assets (including any liability under federal, state or local
environmental
laws or regulations) or the use or intended use of the proceeds of such
(collectively, the "Indemnified Matters"); provided that the Borrower shall not
have an obligation to any Indemnitee hereunder with respect to Indemnified
Matters caused by or resulting from the fraud, bad faith, willful misconduct or
gross negligence of any Indemnitee. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this subsection 10.19 may be
unenforceable because it is violative of any law or public policy, the Borrower
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all Indemnified Matters
incurred by the Indemnitees.
10.20 Non-Discharge. The Borrower waives any defenses based on
suretyship or impairment of Negative Pledge Assets, waives any right of
discharge under ss.3-605 of the Code and consents in advance to (i) any
extension which the Lender may in its sole discretion hereafter grant in the due
date for the payment or performance of any obligation of Borrower hereunder,
(ii) any modification for the benefit of Borrower, including a material
modification of any obligation of the Borrower hereunder which the Lender may in
its sole discretion hereafter grant, (iii) any action taken hereunder which may
result in any impairment of the value of any Negative Pledge Assets whether
provided by Borrower, including, without limitation, any impairment of
collateral as described in subsection 3-605(g) of the Code; (iv) any diligence
in collection, the discharge or release of any party hereto or party to any
subordination agreement, (v) the discharge or release of any collateral or, all
presentment for payment, demand, protest or notice of protest, dishonor or
non-payment, or (vi) the granting of any additional credit hereunder without
notice.
10.21 Effective Date. This Agreement shall be effective from and
after the Closing Date.
10.22 Lender's Right to Assign. Lender shall have the right to assign,
transfer, sell, negotiate, pledge or otherwise hypothecate this Agreement and
any of its rights and security hereunder, including the Note and any other Loan
Documents. Borrower hereby agrees that all of the rights and remedies of Lender
in connection with the interest so assigned shall be enforceable against
Borrower by such assignee with the same force and effect and to the same extent
as the same would have been enforceable by Lender but for such assignment.
Lender shall have the right to sell participations in the Loan at any time
without the consent of Borrower and at no cost to Borrower.
10.23 Construction: In interpreting or constructing the terms of this
Agreement, the Loan Documents and the other Loan Documents, there shall be no
presumption of construction or interpretation against the drafter thereof.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
(Signature Page Attached)
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first above written.
LASALLE BANK NATIONAL ASSOCIATION
(as Lender)
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Its: Vice President
----------------------------------------
XXXXXX PRODUCTS, INC., a Delaware Corporation
(as Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chief Executive Officer
----------------------------------------
XXXXXX PRODUCTS, INC. (Georgia), a Georgia
Corporation (as Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chief Executive Officer
----------------------------------------
XXXXXX PRODUCTS, INC. (New Jersey), a New
Jersey Corporation (as Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chief Executive Officer
----------------------------------------
XXXXXX PRODUCTS, INC. (Nevada), a Nevada
Corporation (as Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chief Executive Officer
----------------------------------------
XXXXXX PRODUCTS, INC. (Ontario) a Canadian
Corporation (as Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: President
----------------------------------------
LP SERVICE CORP., an Illinois Corporation (as
Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chief Executive Officer
----------------------------------------
LPI HOLDINGS, INC., an Illinois Corporation
(as Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chief Executive Officer
----------------------------------------
CRONATRON WELDING SYSTEMS, INC., a North
Carolina Corporation (as Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chief Executive Officer
----------------------------------------
XXXXXXXX AMERICAN Corporation (as Borrower),
an Illinois Corporation (as Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chief Executive Officer
----------------------------------------
XXXXXX PRODUCTS LIMITED, a United Kingdom
Corporation (as Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chairman
----------------------------------------
ACS/SIMCO, INC., an Illinois Corporation
(as Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chairman
----------------------------------------
ASSEMBLY COMPONENT SYSTEMS, INC., an Illinois
Corporation (as Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chairman
----------------------------------------
AUTOMATIC SCREW MACHINE PRODUCTS, COMPANY,
INC., an Alabama Corporation (as Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chairman
----------------------------------------
X.X. XXXX COMPANY, an Illinois Corporation
(as Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chairman
----------------------------------------
LP INDUSTRIAL PRODUCTS COMPANY, an Illinois
Corporation (as Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chairman
----------------------------------------
------------
XXXXXX PRODUCTS DE MEXICO, S.A. DE C.V. (as
Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chairman
----------------------------------------
XXXXXX PRODUCTS, INC., a Texas Corporation
(as Borrower)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Its: Chairman of the Board and Chief
Executive Officer
----------------------------------------
EXHIBITS AND SCHEDULES
----------------------
Exhibit A1 Real Property
Exhibit A2 Locations of Negative Pledge Assets
Exhibit B Form of Signature Authorization
Exhibit C Form of Note
Exhibit D Conditions Precedent to Initial Loan, or Advance
Exhibit E Form of Certificate to Accompany Quarterly and Annual
Financial Statements
Exhibit F Responsible Officers
Schedule 3.4 Deposit Inventory System
Schedule 3.7 Third Party Goods
Schedule 6.5 Permitted Liens
Schedule 6.8 Other Company Names or Fictitious Names
Schedule 6.9 Tax Liabilities
Schedule 6.12 Subsidiaries
Schedule 6.13 Litigation
Schedule 6.18 ERISA Plans
Schedule 6.21 Officers and Directors of Borrower
Schedule 8.1 Liens, Security Interests and Encumbrances
Schedule 8.2 Indebtedness
