Exhibit 10.2
SECOND AMENDED AND RESTATED LOAN AGREEMENT
by and among
Q.E.P. CO., INC.
THE ENTITIES LISTED ON SCHEDULE 1 HERETO
(collectively, "Borrower"),
FLEET CAPITAL CORPORATION
HSBC BANK USA
(collectively, "Lenders," and individually a "Lender")
and
FLEET CAPITAL CORPORATION
AS AGENT FOR THE LENDERS
("Agent")
Dated as of November 14, 2002
TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS......................................................... 2
Section 1.1 Defined Terms.................................................................. 2
Section 1.2 Terms Generally................................................................ 20
Section 1.3 Currency Equivalents Generally................................................. 20
ARTICLE 2 AMOUNTS AND TERMS OF THE LOANS........................................................... 21
A. THE LOANS.................................................................................... 21
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Section 2.1 Revolving Loan................................................................. 21
Section 2.1A BV Loan........................................................................ 22
Section 2.1B Foreign Loan................................................................... 24
Section 2.2 2002 Term Loan................................................................. 26
Section 2.2A 2003 Term Loan................................................................. 27
Section 2.2B Mortgage Loan.................................................................. 28
Section 2.3 Interest Provisions............................................................ 29
Section 2.4 Notice and Manner of Borrowing; Conversion or Continuation of Interest Rate.... 31
Section 2.5 Excess Advances................................................................ 32
Section 2.6 Settlements.................................................................... 32
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Section 2.7 Method of Payment.............................................................. 32
Section 2.8 Collection of Funds............................................................ 32
B. CERTAIN GENERAL PROVISIONS................................................................... 33
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Section 2.9 Taxes.......................................................................... 33
Section 2.10 Computations................................................................... 35
Section 2.11 Additional Payments............................................................ 35
Section 2.12 Capital Adequacy............................................................... 36
Section 2.13 Certificate; Protection........................................................ 36
Section 2.14 Obligations Absolute........................................................... 36
C. ADDITIONAL CLAUSES FOR LIBOR RATE ADVANCES................................................... 37
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Section 2.15 Notice......................................................................... 37
Section 2.16 Invalidity; Enforceability..................................................... 37
Section 2.16A Currency Equivalents........................................................... 37
Section 2.16B Continuity of Contract......................................................... 38
Section 2.16C Euro Amendments................................................................ 38
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Section 2.16D Euro Indemnity........................................... 38
D. MISCELLANEOUS.......................................................... 38
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Section 2.17 Use of Proceeds.......................................... 38
Section 2.18 Termination.............................................. 39
Section 2.19 Indemnification.......................................... 39
Section 2.20 Cross-Termination........................................ 39
Section 2.21 Change of Lending Office................................. 39
Section 2.22 Replacement of Lenders................................... 39
E. LETTERS OF CREDIT...................................................... 40
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Section 2.23 Letters of Credit........................................ 40
Section 2.24 Letter of Credit Participations.......................... 43
Section 2.25 Excess Cash Flow Recapture............................... 45
ARTICLE 3 CONDITIONS PRECEDENT............................................... 45
Section 3.1 Conditions Precedent to Effectiveness.................... 45
Section 3.2 Conditions Precedent to All Advances, Etc................ 47
Section 3.3 Conditions Precedent to the 2003 Term Loan............... 47
Section 3.4 Conditions Precedent to the Mortgage Effectiveness....... 48
ARTICLE 4 REPRESENTATIONS AND WARRANTIES..................................... 48
Section 4.1 Incorporation, Good Standing, and Due Qualification...... 48
Section 4.2 Corporate Power and Authority............................ 48
Section 4.3 Legally Enforceable Agreement............................ 49
Section 4.4 Financial Statements and Condition; Full Disclosure...... 49
Section 4.5 Other Agreements; No Default............................. 50
Section 4.6 Litigation............................................... 50
Section 4.7 No Defaults on Outstanding Judgments or Orders........... 50
Section 4.8 Ownership and Liens...................................... 50
Section 4.9 Subsidiaries............................................. 50
Section 4.10 Operation of Business.................................... 50
Section 4.11 Taxes.................................................... 51
Section 4.12 Debt..................................................... 51
Section 4.13 Capital Stock............................................ 51
Section 4.14 Margin Securities........................................ 51
Section 4.15 Fiscal Year.............................................. 51
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Section 4.16 No Broker's Fees, etc.................................... 51
Section 4.17 Governmental Consents and Regulatory Approvals........... 51
Section 4.18 Eligible Accounts Receivable............................. 52
Section 4.19 Eligible Inventory....................................... 52
Section 4.20 Environmental Compliance................................. 52
Section 4.21 Compliance with Laws..................................... 52
Section 4.22 Events of Default........................................ 52
Section 4.23 Labor Disputes and Acts of God........................... 52
Section 4.24 ERISA.................................................... 53
ARTICLE 5 AFFIRMATIVE COVENANTS.............................................. 53
Section 5.1 Maintenance of Existence................................. 53
Section 5.2 Maintenance of Records................................... 53
Section 5.3 Maintenance of Properties................................ 53
Section 5.4 Conduct of Business...................................... 54
Section 5.5 Maintenance of Insurance................................. 54
Section 5.6 Compliance With Laws..................................... 54
Section 5.7 Right of Inspection...................................... 54
Section 5.8 Reporting Requirements................................... 54
Section 5.9 Eligible Accounts Receivable; Eligible Inventory......... 56
Section 5.10 Collateral............................................... 56
Section 5.11 Defend Collateral........................................ 57
Section 5.12 Environmental Covenants.................................. 57
Section 5.13 Operating Accounts....................................... 57
Section 5.14 Permitted Acquisitions................................... 57
Section 5.15 Minimum Availability..................................... 59
ARTICLE 6 NEGATIVE COVENANTS................................................. 59
Section 6.1 Liens.................................................... 59
Section 6.2 Debt..................................................... 60
Section 6.3 Mergers, Etc............................................. 60
Section 6.4 Leases................................................... 61
Section 6.5 Sale and Leaseback....................................... 61
Section 6.6 Restricted Payments...................................... 61
Section 6.7 Sale of Assets........................................... 61
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Section 6.8 Investments.............................................. 61
Section 6.9 Guaranties, Etc.......................................... 61
Section 6.10 Transactions With Affiliates............................. 62
Section 6.11 Subsidiaries............................................. 62
Section 6.12 Fiscal Year.............................................. 62
Section 6.13 Accounting Methods....................................... 62
Section 6.14 Inventory Locations...................................... 62
ARTICLE 7 FINANCIAL COVENANTS................................................ 62
Section 7.1 Current Ratio............................................ 62
Section 7.2 Tangible Net Worth....................................... 62
Section 7.3 Leverage Ratio........................................... 63
Section 7.4 Senior Debt to Trailing EBITDA Ratio..................... 63
Section 7.5 Interest Coverage Ratio.................................. 63
Section 7.6 Debt Service Coverage Ratio.............................. 64
Section 7.7 Fixed Charge Coverage Ratio.............................. 64
Section 7.8 Certain Financial Terms.................................. 64
Section 7.9 Exclusion from Calculations.............................. 66
ARTICLE 8 SECURITY........................................................... 66
ARTICLE 9 EVENTS OF DEFAULT.................................................. 66
Section 9.1 Events of Default........................................ 66
ARTICLE 10 THE AGENT......................................................... 69
Section 10.1 Appointment.............................................. 69
Section 10.2 Nature of Duties......................................... 69
Section 10.3 Lack of Reliance on the Agent............................ 69
Section 10.4 Certain Rights of the Agent.............................. 70
Section 10.5 Reliance................................................. 70
Section 10.6 Indemnification.......................................... 70
Section 10.7 The Agent in its Individual Capacity..................... 70
Section 10.8 Resignation.............................................. 71
ARTICLE 11 GENERAL PROVISIONS................................................ 72
Section 11.1 Amendments, Etc.......................................... 72
Section 11.2 Notices, Etc............................................. 73
Section 11.3 No Waiver; Remedies...................................... 74
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Section 11.4 Successors and Assigns................................. 74
Section 11.5 Costs, Expenses, and Taxes; Indemnification............ 76
Section 11.6 Right of Setoff........................................ 77
Section 11.7 Governing Law; Jurisdiction............................ 77
Section 11.8 Entire Agreement; Severability of Provisions........... 78
Section 11.9 Estoppel Certificates.................................. 79
Section 11.10 Waiver of Jury Trial and Consequential Damages......... 79
Section 11.11 Replacement of the Note................................ 80
Section 11.12 Survival of Representations and Warranties............. 80
Section 11.13 Further Assurances..................................... 80
Section 11.14 Construction........................................... 80
Section 11.15 Captions............................................... 80
Section 11.16 Opinion Letter......................................... 80
Section 11.17 Examination of Records................................. 81
Section 11.18 Releases............................................... 81
Section 11.19 Counterparts........................................... 81
Section 11.20 Subsequent Bankruptcy.................................. 81
Section 11.21 Judgment............................................... 81
Section 11.22 Maximum Rate of Interest............................... 82
Section 11.23 Payments Pro Rata...................................... 82
Section 11.24 Domicile of Loans...................................... 83
Section 11.25 Register............................................... 83
Section 11.26 Confidentiality........................................ 84
Section 11.27 Superseding Original Loan Agreement.................... 84
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SECOND AMENDED AND RESTATED LOAN AGREEMENT ("Agreement"), dated as of
November 14, 2002, by and between Q.E.P. CO., INC., a Delaware corporation with
its chief executive office and principal place of business at 0000 Xxxxxxx
Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000, Q.E.P. - O'TOOL, INC., a Nevada corporation
with its chief executive office and principal place of business at 0000 Xxxx
Xxxxx Xxxx, Xxxxxxxxx, XX 00000, XXXXXX TOOL CORPORATION, an Indiana corporation
with its chief executive office and principal place of business at 0000 Xxxxxxx
Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000, XXXXXXX CONSOLIDATED INDUSTRIES, INC., a
Delaware corporation with its chief executive office and principal place of
business at 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000, XXXXXXX JAPAN KK, an
entity organized in Japan with its chief executive office and principal place of
business at 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000, XXXXXXX HOLDING
INTERNATIONAL, INC., a Delaware corporation with its chief executive office and
principal place of business at 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000,
XXXXXXX COMPANY CANADA LIMITED, an entity organized in Ontario, Canada with its
chief executive office and principal place of business at 0000 Xxxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxx, Xxxxxx X0X0X0, XXXXXXX HOLLAND B.V., an entity organized in
The Netherlands with its chief executive office and principal place of business
at 3360 AB Sliedrecht, X.X. Xxx 00, Xxxxxxxxxxx, Xxx Xxxxxxxxxxx, XXXXXXX U.K.
LIMITED, an entity organized in England with its chief executive office and
principal place of business at Xxxx 00, Xxxxxxxxxx Xxxxxxxxxx Xxxxxx, Bailiff
Bridge, Brighouse, West Yorkshire, England, HD6 4EA, XXXXXXX GERMANY GmbH, an
entity organized in Germany with its chief executive office and principal place
of business at Xxxxxxxxxxxxxxx 00, 00000 Xxxxxxxxx-Xxxxxxx, Xxxxxxx, XXXXXXX
S.A.R.L., an entity organized in France with its chief executive office and
principal place of business at 00 xxx xx xx Xxxx, 00000x Xxxxxxx, Xxxxxx, Q.E.P.
STONE HOLDINGS, INC., a Florida corporation with a place of business at 0000
Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000, Q.E.P. AUST. PTY. LIMITED, an entity
organized in Australia with a place of business at 00-00 Xxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxxx 0000, Q.E.P. CHILE LIMITADA, an entity organized in Chile
with a place of business at Xx. Xxxxxxxx 0000, Xxxxxxxxxx, Xxxxxxxx, Xxxxx,
Q.E.P. HOLDING B.V., an entity organized in the Netherlands with its chief
executive office and principal place of business at 3360 AB Sliedrecht,
Parallelweg, The Netherlands, Q.E.P. CO. NEW ZEALAND LIMITED, an entity
organized in New Zealand with a place of business at 00 Xxxxxxx Xxxxx, Xxxxxxx
Xxxx, Xxxxxxxx, Xxx Xxxxxxx, Q.E.P. ZOCALIS HOLDING L.L.C., a Delaware limited
liability company with a place of business at 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx,
Xxxxxxx 00000, Q.E.P. ZOCALIS S.R.L., an entity organized in Argentina with its
chief executive office and principal place of business at 0000 Xxxxx Xxxxxxx,
Xxxxxx Xxxxx, Xxxxxxxxx, and BOIARDI PRODUCTS CORPORATION, an Ohio corporation,
with its chief executive office and principal place of business at 000 Xxxx
Xxxxxx, Xxxxxx Xxxxx, Xxx Xxxxxx 00000, FLEET CAPITAL CORPORATION ("FCC") and
HSBC BANK USA ("HSBC" and together with FCC, the "Lenders" and each individually
a "Lender"), and FLEET CAPITAL CORPORATION, a Rhode Island corporation with an
office at Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, as agent for the
Lenders, (hereinafter referred to as the "Agent").
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W I T N E S S E T H:
The Borrower and FCC, as assignee of Fleet National Bank, have entered
into an Amended and Restated Loan Agreement dated as of October 21, 1997 (as
amended from time to time, the "Original Loan Agreement"). The Borrower has
requested, among other things, that FCC continue to extend certain credit
accommodations to the Borrower, that HSBC extend certain credit accommodations
to Borrower, that FCC serve as the agent for itself and HSBC, that the
Commitment be increased and that an additional term loan be made to Borrower. In
furtherance thereof, the Borrower, the Lenders, and the Agent desire to amend
and restate the Original Loan Agreement in its entirety as hereinafter set
forth.
NOW, THEREFORE, in consideration of these premises and the covenants
and agreements herein contained, the Borrower, the Lenders and the Agent agree
as follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. The following capitalized terms are used
in this Agreement with the respective meanings set forth in this Section 1.1.
Terms defined in the singular shall have the same meaning when used in the
plural, and vice versa.
"Account Debtor" means any Person who is or may become obligated to
Borrower on or under a Receivable.
"Affiliate" means any Person: (1) that, directly or indirectly,
controls, is controlled by, or is under common control with, Borrower; (2) that
is a shareholder, officer, or director of Borrower or of any Person that,
directly or indirectly, controls, is controlled by, or is under common control
with, Borrower, together with, in each case, their respective relatives (whether
by blood or marriage), heirs, executors, administrators, personal
representatives, successors, and assigns; and (3) any trust of which any of the
foregoing Persons is a settlor, trustee, or beneficiary. For the purposes of
this definition, the term "control" 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; and "controlled" shall have the meaning correlative
thereto.
"Agent" means FCC, in its representative capacity as agent for the
Lenders.
"Agreement" means this Second Amended and Restated Loan Agreement, as
amended, supplemented, or modified and in effect from time to time.
"Alternative Currency" means Dutch Gilders, Euros or any lawful
currency other than dollars mutually agreed to by the Agent and the Borrower
which is freely transferable and convertible into dollars.
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"Amendment Agreement" means that certain Agreement of Amendment dated
of even date herewith by and among the Borrowers and the Agent.
"Available Amount" means the maximum aggregate amount from time to time
that beneficiaries may draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
"Business Day" means a day other than a Saturday, Sunday, or other day
on which banks in the States of Connecticut, Rhode Island, Florida or New York
are required or authorized by law to be closed provided, however, that when used
in connection with a LIBOR Rate Advance, the term shall also exclude any day on
which banks are not open for dealings in dollar deposits in the London interbank
market.
"Borrowing Base" means, at the relevant time of reference, the amount
which is equal to (i) 85% of Eligible Accounts Receivable, plus (ii) the lesser
of (a) the sum of (1) 50% of Eligible Finished Goods Inventory, plus (2) 35% of
Eligible Raw Materials Inventory, plus (3) 25% of Eligible Work-in-Process
Inventory or (b) $12,000,000, provided that Lender may, in its sole discretion,
at any time and from time to time upon three (3) Business Days' prior written
notice (unless a Default or an Event of Default shall have occurred and be
continuing, in which event no such notice shall be required), adjust the advance
rates set forth within this definition of "Borrowing Base".
"Borrowing Base Certificate" means that term as defined in Section
5.8(d).
"Borrowing Request" means that term as defined in Section 2.4.
"BV" means Xxxxxxx Xxxxxxx B.V.
"BV Advance" or "BV Advances" means that term as defined in Section
2.1A(a).
"BV Borrowing Base" means, at the relevant time of reference, the
amount which is equal to (i) 90% of the amount for which Eligible BV Accounts
Receivable are insured in accordance with the definition of Eligible BV Accounts
Receivable net of all deductibles, expenses, policy limits, reserves and the
like (by way or example, if $1,000,000 of Eligible BV Accounts Receivable were
insured at 90% of face value with a $100,000 deductible, the BV Borrowing Base
would be $810,000 i.e., (90% x $900,000), plus (ii) the Excess Borrowing Base
(but not including any portion of the Borrowing Base allocated to the Foreign
Companies other than Xxxxxxx Holland B.V.).
"BV Loan" means the BV Advance or BV Advances made pursuant to Section
2.1A(a).
"BV Note" means that term as defined in Section 2.1A(c).
"BV Sublimit" means $5,000,000.00.
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"Canadian Property" means that certain real property owned by Xxxxxxx
Company Canada Limited and located at 0000 Xxxxxxx Xxxxxx Xxxx, Xxxxxxxx,
Xxxxxxx, Xxxxxx, together with all improvements thereon.
"Capital Assets" means that term as defined in Section 7.8(a).
"Capital Expenditures" means that term as defined in Section 7.8(b).
"Capital Lease" means all leases of property (whether real, personal,
or mixed) which have been or should be capitalized on the books of the lessee in
accordance with GAAP.
"Collateral" means all property of Borrower now or hereafter subject to
the Liens granted in the Security Documents.
"Commitment" shall mean any of the commitments of any Lender, i.e.,
either a Term Loan Commitment, a Mortgage Loan Commitment or a Revolving Loan
Commitment.
"Contaminant" means any pollutants, hazardous or toxic substances or
wastes or contaminated materials including but not limited to oil and oil
products, asbestos, asbestos containing materials, urea formaldehyde foam
insulation, transformers or other equipment which contain dielectric fluid
containing levels of polychlorinated biphenyls, flammables, explosives,
radioactive materials, laboratory wastes, biohazardous wastes, chemicals,
elements, compounds or any other materials and substances (including materials,
substances or things which are composed of or which have as constituents any of
the foregoing substances), which are or may be subject to regulation under, or
the Release of which or exposure to which is prohibited, limited or regulated
under any Environmental Law.
"Credit Availability" means, at the relevant time of reference, the
dollar or dollar equivalent amount equal to (i) in the case of the Revolving
Loan, the lesser of (a) the Borrowing Base (after giving effect to the
calculation of the Excess Borrowing Base) and (b) the Revolving Loan Commitment,
less, in each case, the sum of the aggregate outstanding principal amount of all
Revolving Advances plus the Available Amount plus any unpaid Reimbursement
Obligations; and (ii) in the case of the BV Loan, the lesser of (x) the BV
Borrowing Base and (y) the BV Sublimit less, in each case, the sum of the
aggregate outstanding principal amount of BV Advances.
"Current Assets" means the term as defined in Section 7.8(c).
"Current Liabilities" means that term as defined in Section 7.8(d).
"Current Maturities of Long Term Debt" means that term as defined in
Section 7.8(e).
"Debt", as applied to any Person, means: (1) indebtedness or liability
of such Person for borrowed money, or with respect to deposits or advances of
any kind, or for the deferred purchase price of property or services (including
trade obligations); (2) all obligations of such Person evidenced by notes,
bonds, debentures or similar instruments, (3) all obligations of such
4
Person under conditional sale or other title retention agreements relating to
property or assets purchased by such Person, (4) all obligations of such Person
for the deferred purchase price of property or services (including trade
obligations); (5) all obligations of such Person as lessee under Capital Leases;
(6) current liabilities of such Person in respect of the present value of
unfunded vested benefits under any Plan; (7) obligations of such Person under
letters of credit, bankers acceptances, or comparable arrangements; (8)
obligations of such Person arising under acceptance facilities; (9) guaranties,
endorsements (other than for collection or deposit in the ordinary course of
business), and other contingent obligations of such Person to purchase, to
provide funds for payment, to supply funds to invest in any Persons, or
otherwise to assure a creditor against loss; (10) all obligations of such Person
secured by any Lien on any of such Person's assets or property, whether or not
the obligations have been assumed, and (11) all obligations of such Person in
respect of interest rate protection agreements, foreign currency exchange
agreements or other interest or exchange rate hedging arrangements, provided
that any net positive amount owed to such Person shall not be deemed an
obligation. The Debt of any Person shall include the Debt of any partnership in
which such person is a general partner.
"Default" means an event or condition the occurrence or existence of
which, with the lapse of time or the giving of a required notice, or both, would
become an Event of Default.
"Default Rate" means that rate of interest that is equal to the sum of
2% plus the rate of interest otherwise applicable to such Loan under the terms
of this Agreement.
"Defaulting Lender" shall mean any Lender with respect to which a
Lender Default is in effect.
"Domestic Advances" shall mean those advances made in favor of Q.E.P.
Co., Inc., Q.E.P.-O'Tool, Inc., Xxxxxx Tool Corporation, Westpoint Foundry,
Inc., Xxxxxxx Consolidated Industries, Inc., Xxxxxxx Holding International,
Inc., Xxxxxxx Company Canada Limited, Q.E.P. Stone Holdings, Inc., and Boiardi
Products Corporation.
"Domestic Advance Note" shall mean that term as defined in Section
2.1(c).
"Domestic Companies" shall mean Q.E.P. Co., Inc., Q.E.P.-O'Tool, Inc.,
Xxxxxx Tool Corporation, Westpoint Foundry, Inc., Xxxxxxx Consolidated
Industries, Inc., Xxxxxxx Holding International, Inc., Xxxxxxx Company Canada
Limited, Q.E.P. Stone Holdings, Inc., and Boiardi Products Corporation.
"Drawdown Date" means the date on which any Revolving Advance, BV
Advance or advance under the Term Loans or the Mortgage Loan is made.
"Earnings Before Interest and Taxes" means that term as defined in
Section 7.8(f).
"Earnings Before Interest, Taxes, Depreciation and Amortization" means
that term as defined in Section 7.8(g).
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"Eligible Accounts Receivable" means, at the time of calculation, bona
fide outstanding Receivables of Borrower, in which the Agent has a first
priority perfected security interest, which satisfy all of the following
requirements:
(A) It is owing to Borrower and is subject to a validly perfected
security interest in favor of the Agent having priority over any and all other
liens or encumbrances thereon;
(B) It arises from the sale or lease of goods by Borrower or the
rendering of services by Borrower which have been shipped or delivered to an
Account Debtor (i) on an absolute sale basis and not on consignment, on
approval, or on a sale or return basis or subject to any other repurchase or
return agreement, and (ii) on an open receivable basis, which is not evidenced
by chattel paper or an instrument of any kind; provided that in any case, no
material part of the subject goods or services has been returned, rejected, lost
or damaged, and the Account Debtor is not insolvent or the subject of any
bankruptcy or insolvency proceeding of any kind;
(C) If the Account Debtor is located outside the United States or,
subject to subparagraph (K) of this definition, Canada, (i) the subject goods
shall have been shipped after receipt, by Borrower from the Account Debtor, of
(a) an irrevocable letter of credit, which letter of credit shall have been
issued or confirmed by a financial institution acceptable to the Agent and shall
be in form and substance acceptable to the Agent and shall be transferred,
assigned or otherwise made payable to the Agent in form and substance
satisfactory to the Agent, or (b) credit insurance in form and substance and
issued by an insurer satisfactory to the Agent, and (ii) the Receivable shall be
payable in the full amount of the face value of the Receivable in United States
dollars;
(D) It is a valid, legally enforceable obligation of the Account
Debtor thereunder and is not and may not become subject to any offset,
counterclaim or, in the opinion of the Agent, contra or other defense on the
part of such Account Debtor or to any claim on the part of such Account Debtor
denying liability thereunder; provided, however, that if it is subject to any
such offset, defense, or claim, it shall be ineligible to the extent of such
offset, defense or claim;
(E) It is subject to no lien or security interest whatsoever
(including purchase money security interests), except for the security interest
of the Agent hereunder and liens or security interests which have been expressly
subordinated to the security interest of the Agent in form and substance
satisfactory to the Agent;
(F) It is evidenced by an invoice or other proof of delivery in form
acceptable to the Agent;
(G) Except as specifically approved in writing by the Agent, it has
not remained unpaid for a period exceeding the lesser of (i) ninety (90) days
after the date of invoice, or (ii) sixty (60) days after the due date thereof;
(H) It is not owing from an Account Debtor from whom 50% or more of
the amounts owing Borrower have remained unpaid for a period exceeding the
lesser of (i) ninety (90) days from the date of invoice, or (ii) sixty (60) days
after the due date thereof;
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(I) It does not arise out of transactions with an employee, officer,
director, Affiliate, or Subsidiary of Borrower;
(J) It does not arise out of a transaction with, and is not owing
from, the United States of America in an amount in excess of $1,000, unless
Borrower has complied with the Federal Assignment of Claims Act, when
applicable;
(K) It is not owing from an Account Debtor located in the Province
of Quebec, Canada or in any jurisdiction in which the Borrower has not complied
with any laws which might restrict the ability of the Borrower to collect such
Receivables; and
(L) The Agent has determined in its sole discretion that it is an
Eligible Account Receivable.
With respect to the Receivables, Borrower warrants and represents to
Lender that, unless otherwise indicated in writing by Borrower: (A) They are
genuine, are in all respects what they purport to be, are not evidenced by a
judgment and are only evidenced by one, if any, executed original instrument,
agreement, contract or document, which has been delivered to the Agent; (B) They
represent undisputed, bona fide transactions completed in accordance with the
terms and provisions contained in any documents related thereto; (C) The amounts
of the face value shown on any schedule of accounts or accounts receivable aging
report provided to the Agent, and all invoices and statements delivered to the
Agent with respect to any Receivable are actually and absolutely owing to
Borrower and are not contingent for any reason; (D) There are no setoffs,
counterclaims or disputes existing or asserted with respect thereto and Borrower
has not made any agreement with any Account Debtor thereunder for any deduction
therefrom, except a discount or allowance allowed by Borrower in the ordinary
course of its business for prompt payment; (E) There are no facts, events or
occurrences which in any way impair the validity or enforcement thereof or tend
to reduce the amount payable thereunder from the amount of the invoice face
value with respect to any Eligible Accounts Receivable, and on all contracts,
invoices and statements delivered to the Agent with respect thereto; (F) To the
best knowledge of Borrower's officers, directors and key employees (including,
without limitation, any sales personnel dealing with any such Account Debtor),
all Account Debtors, under any Eligible Accounts Receivable, (i) had the
capacity to contract at the time any contract or other document giving rise to
the Receivable was executed, (ii) are solvent, and (iii) are not the subject of
a bankruptcy or insolvency proceeding of any kind; (G) The goods giving rise
thereto are not, and were not at the time of the sale thereof, subject to any
lien, claim, encumbrance or security interest, except those of the Agent, those
terminated prior to the date hereof or those subordinate to the Agent's security
interest; (H) Borrower has no knowledge of any fact or circumstance which would
materially impair the validity or collectability thereof; (I) To the best of
Borrower's knowledge, there are no proceedings or actions which are threatened
or pending against any Account Debtor thereunder which might result in any
material adverse change in the financial condition of such Account Debtor; and
(J) They have not been pledged, assigned or transferred to any other Person.
7
In the event of any dispute as to whether a Receivable is or has ceased
to be an Eligible Account Receivable, the decision of the Agent shall control.
"Eligible BV Accounts Receivable" means Eligible Accounts Receivable
owed to BV which are insured in form, substance and amount and by an insurer
satisfactory to the Agent with Lender named as loss payee.
"Eligible Finished Goods Inventory" means that portion of Eligible
Inventory which consists of finished goods.
"Eligible Inventory" means that portion of the inventory of Borrower
consisting of raw materials normally and currently used in the Borrower's
business, work-in-process and finished goods held for sale by the Borrower,
normally and currently saleable in the ordinary course of the Borrower's
business, and which at all times pertinent hereto is of good and merchantable
quality, free from defects, as to which the Agent has a perfected first priority
Lien, and which is located at the locations set forth in the Security Agreement,
and as to which Borrower has satisfied all terms, conditions, warranties and
representations of this Agreement and the other Loan Documents; but Eligible
Inventory does not include any of the following: (a) catalogs and other
promotional materials of any kind; (b) used items; (c) any returned items
(unless returned in a salable form and any account receivable arising from the
sale of such returned item has been reversed); (d) any damaged, defective or
recalled items; (e) any obsolete items; (f) any items used as demonstrators,
prototypes or salesmen's samples; (g) any items of inventory which have been
consigned to Borrower or as to which a Person claims a Lien; (h) any items of
inventory which have been consigned by the Borrower to a consignee; (i) packing
and shipping materials; (j) inventory located on premises leased by the Borrower
from a landlord with whom Lender has not entered into a landlord's waiver on
terms satisfactory to Lender in its reasonable judgment; (k) inventory in
transit; (l) spare parts; and (m) inventory which in the reasonable judgment of
Lender is considered to be slow-moving or otherwise not merchantable. Eligible
Inventory shall be valued at the lower of (a) cost, (b) market value, or (c) the
valuation consistent with that employed in the preparation of the financial
statements of the Borrower referred to in Section 4.4 hereof.
"Eligible Raw Materials Inventory" means that portion of Eligible
Inventory which consists of raw materials.
"Eligible Transferee" shall mean and include a commercial bank, an
insurance company, a finance company, a financial institution, any fund that
invests in loans or any other "accredited investor" (as defined in Regulation D
of the Securities Act).
"Eligible Work-in-Process Inventory" means that portion of Eligible
Inventory which consists of work-in-process.
"Enforcement Action" means any action, proceeding or investigation
(administrative or judicial, civil or criminal) instituted or threatened by U.S.
Environmental Protection Agency, or any other federal, state or local
governmental agency related to any alleged or actual violation of any
Environmental Law with respect to any property owned or leased by the Borrower
and/or
8
any business conducted thereon, including, but not limited to, actions seeking
Remediation, the imposition or enforcement of liability pursuant to any
Environmental Law and compliance with any Environmental Law. Enforcement Action
shall also include any similar actual or threatened action by any private party
pursuant to any Environmental Law.
"Environmental Laws" means any and all present and future: United
States and Canadian federal, state, and local laws, statutes, ordinances, rules,
and regulations, relating to protection of human health and the environment from
Contaminants including but not limited to the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, (CERCLA), 42 USC (S)9601
et seq.; the Resource Conservation and Recovery Act, as amended, (RCRA), 42 USC
(S)6901 et seq. the Clean Air Act, as amended, 42 USC (S)7401 et seq.; the
Federal Water Pollution Control Act, as amended (including but not limited to as
amended by the Clean Water Act), 33 USC (S)1251 et seq.; The Toxic Substances
Control Act, as amended (TSCA), 15 USC (S)2601 et seq.; the Emergency Planning
and Community Right-to-Know Act (also known as XXXX Title III), as amended,
(EPCRA), 42 USC (S)11001 et seq.; the Safe Drinking Water Act, as amended, 42
USC (S)300(f) et seq.; the Federal Insecticide, Fungicide and Rodenticide Act,
as amended (FIFRA), 7 USC (S)136 et seq.; the Occupational Safety and Health
Act, as amended, (OSHA), 29 USC (S)651 et seq.; the Endangered Species Act, as
amended, 16 USC (S)1531 et seq.; the National Environmental Policy Act, as
amended, (NEPA), 42 USC (S)4321 et seq.; the Rivers and Harbors Act of 1899 33
USC (S)401 et seq.; state and local laws, rules and regulations similar to or
addressing similar matters as the foregoing federal laws; laws, rules and
regulations governing underground or above-ground storage tanks; laws, rules and
regulations imposing liens for response costs or costs of other Remediation,
whether or not those liens have a higher priority than existing liens; laws,
rules and regulations conditioning transfer of property upon a form of negative
declaration or other approval of a Governmental Authority of the environmental
condition of a property; laws, rules and regulations requiring the disclosure of
conditions relating to Contaminants in connection with transfer of title to or
interest in property law; laws, rules and regulations requiring notifying of any
government entity with regard to a Release of any Contaminant; conditions or
requirements imposed in connection with any permits; government orders and
demands and judicial orders pursuant to any of the foregoing; laws, rules and
regulations relating to the Release, use, treatment, storage, disposal,
transportation, transfer, generation, processing, production, refining, control,
management, or handling of Contaminants; any and all other laws, rules,
regulations, guidance, guidelines and common law of any governmental entity
relating to the protection of human health or the environment from Contaminants.
The reference in this paragraph to state laws specifically includes, but is not
limited to, the applicable laws of the States of Connecticut, Florida,
California, Indiana and Nevada.
"Equipment" means all "Equipment" as that term is defined in the UCC,
of Borrower, whether presently owned or hereafter acquired, and including,
without limitation, machinery, furniture, furnishings, and fixtures, and any and
all goods used or bought for use in or being used for use in the conduct of
Borrower's business and all goods used or bought for use in business which are
not included within the definition of Inventory, and all accessions and
additions thereto, replacements therefor.
9
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which, together with the Borrower, would be treated as a single
employer under Section 4001 of ERISA.
"Event of Default" means any of the events specified in Section 9.1 of
this Agreement.
"Excess Borrowing Base" means, at the relevant time of reference, the
amount which is equal to (i) the excess of the Borrowing Base over the
Commitment with respect to the Revolving Loan plus (ii) without duplication,
such additional portion of the Borrowing Base as Q.E.P., by written notice to
the Agent, allocates to BV and to the Foreign Companies, which portion shall be
subtracted on a dollar-for-dollar basis in calculating the Borrowing Base. By
way of example, if the Borrowing Base is $12,000,000, the Commitment with
respect to the Revolving Loan is $10,000,000, and Q.E.P. allocates an additional
$1,000,000 of the Borrowing Base to BV, the Excess Borrowing Base would be
$3,000,000 (i.e. (i) $12,000,000 minus $10,000,000 plus (ii) $1,000,000) and the
Borrowing Base would be $9,000,000.
"Excess Cash Flow" shall mean, for any period, the difference arrived
at by subtracting (i) the sum of Current Maturities of Long Term Debt plus
Interest Expense from (ii) Earnings Before Interest, Taxes, Depreciation and
Amortization minus the sum of unfinanced capital expenditures, taxes and
dividends.
"Existing Letter of Credit" means each letter of credit previously
issued for the account of Borrower or any Subsidiary that (i) is outstanding on
the date hereof and (b) is listed on Schedule 2.23.
"Foreign Advance Note" means that term as defined in Section 2.1B(c).
"Foreign Advances" shall mean those advances made in favor of Xxxxxxx
Japan KK, Xxxxxxx U.K. Limited, Xxxxxxx Germany GmbH, Xxxxxxx S.A.R.L., Q.E.P.
Holding B.V., Q.E.P. Aust. Pty. Limited, Q.E.P. Chile Limitada, Q.E.P. Co., New
Zealand Limited, and Q.E.P. Zocalis S.R.L.
"Foreign Borrowing Base" means, at the relevant time of reference, the
amount which is equal to (i) that portion of the Borrowing Base which consists
of assets of the Foreign Companies plus (ii) the Excess Borrowing Base (but not
including any portion of the Borrowing Base which is allocated to BV).
"Foreign Companies" shall mean Xxxxxxx Japan KK, Xxxxxxx U.K. Limited,
Xxxxxxx German GmbH, Xxxxxxx S.A.R.L., Q.E.P. Holding B.V., Q.E.P. Aust. Pty.
Limited, Q.E.P. Chile Limitada, Q.E.P. Co., New Zealand Limited, and Q.E.P.
Zocalis S.R.L.
"Foreign Sublimit" means $5,000,000.
10
"GAAP" means (i) when used in general, other than as provided below,
generally accepted accounting principles in the United States as in effect from
time to time, applied on a consistent basis and, (ii) when used in Article 7,
whether directly or indirectly through reference to a capitalized term used or
defined therein, principles that are consistent with the principles promulgated
or adopted by the Financial Accounting Standards Board and its predecessors, in
effect for the fiscal year ended on February 28, 2002.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or pertaining
to government.
"Guaranty" means any obligation, contingent or otherwise, of any Person
guaranteeing or having the economic effect of guaranteeing any Debt of any other
Person (the "primary obligor") in any manner, whether directly or indirectly,
and including any obligation of such Person, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such Debt or
to purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Debt, (b) to purchase or lease property, securities or
services for the purpose of assuring the owner of such Debt of the payment of
such Debt, or (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Debt; provided, however, that the term
Guaranty shall not include endorsements for collection or deposit in the
ordinary course of business.
"Head Office" means the principal office of the Agent at 000
Xxxxxxxxxxx Xxxxxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxx.
"Intercreditor Agreement" means the Intercreditor Agreement, dated as
of April 5, 2001, by and among Borrower, Lender and The HillStreet Fund, L.P.,
as amended and in effect from time to time.
"Interest Expense" means that term as defined in Section 7.8(h) of this
Agreement.
"Interest Period" means in the case of any Revolving Advance or
principal portion of the Term Loans or the Mortgage Loan, other than a Prime
Rate Advance, the one, two, three, or six month period selected by the Borrower
pursuant to this Agreement. Each Interest Period shall commence on the date such
advance is made or the date of a subsequent interest rate election, as the case
may be, and shall end on the date as the Borrower may select in accordance with
the above, provided, that:
(i) any Interest Period which would otherwise end on a day which
is not a Business Day shall end on the next or succeeding
Business Day unless, in the case of a LIBOR Rate Advance
only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period
shall end on the next preceding Business Day;
(ii) each Interest Period which commences before and would
otherwise end after the Maturity Date, shall end on the
Maturity Date;
11
(iii) any Interest Period which begins on a day for which there is
no numerically corresponding day in the calendar month
during which such Interest Period is to end, shall (subject
to clause (i) above) end on the last day of such calendar
month;
(iv) each Interest Period which commences during an Interest
Period in effect for outstanding LIBOR Rate Advances shall
end on the last day of such Interest Period then in effect
for LIBOR Rate Advances; and
(v) all Interest Periods which commence on the same date shall
end on the same date.
"Inventory" means all "Inventory" as that term is defined in the UCC,
including, without limitation, any and all goods, merchandise or other personal
property, wheresoever located and whether or not in transit, now owned or
hereafter acquired by Borrower in the normal course of business, which is or may
at any time be held for sale or lease, or furnished or to be furnished under any
contract or service or held as raw materials, work in process, supplies or
materials used or consumed in Borrower's business, and all such property the
sale or other disposition of which has given rise to accounts, chattel paper,
documents, or instruments (as such terms are defined in the Uniform Commercial
Code) and which has been returned to or repossessed or stopped in transit by
Borrower.
"Issuing Lender" means FCC. FCC may, in its discretion, arrange for one
or more Letters of Credit to be issued by one or more Affiliates of such Issuing
Lender, including without limitation Fleet National Bank, provided in each case
that the Borrower does not reasonably object based on such Affiliate's
creditworthiness, and the term Issuing Lender shall include any such Affiliate
with respect to Letters of Credit issued by it or. Notwithstanding the
foregoing, Borrower shall not object to Fleet National Bank as an Issuing
Lender.
"Lenders" means FCC and HSBC, or any successors, assigns or holders of
all or any part of the obligations of Borrower.
"Lender Default" shall mean (i) the refusal (which has not been
retracted) or the failure of a Lender to make available its portion of any
Borrowing in violation of the requirements of this Agreement or to fund its
portion of any unreimbursed payment under Sections 2.23 or 2.24 or (ii) a Lender
having notified in writing the Agent that such Lender does not intend to comply
with its obligations under Section 2.1, 2.1A, 2.1B, 2.2, 2.2A or 2.2B.
"Lender Parties" means that term as defined in Section 11.5(b).
"Letter of Credit Application" means that term as defined in Section
2.23(b) of this Agreement.
12
"Letters of Credit" means, collectively, any letters of credit issued,
extended or renewed by the Issuing Lender for the account of Borrower pursuant
to this Agreement, including existing Letters of Credit.
"LIBOR" shall mean, as applicable to any LIBOR Rate Advance, the rate
per annum (rounded upward, if necessary, to the nearest 1/32 of one percent) as
determined on the basis of the offered rates for deposits in U.S. dollars, for a
period of time comparable to such LIBOR Rate Advance which appears on the
Telerate page 3750 as of 11:00 a.m. (London time) on the day that is two (2)
London Banking Days preceding the first day of such LIBOR Rate Advance;
provided, however, if the rate described above does not appear on the Telerate
System on any applicable interest determination date, the LIBOR rate shall be
the rate (rounded upwards as described above, if necessary) for deposits in U.S.
dollars for a period substantially equal to the interest period on the Reuters
Page "LIBO" (or such other page as may replace the LIBO Page on that service for
the purpose of displaying such rates), as of 11:00 a.m. (London Time), on the
day that is two (2) London Banking Days prior to the beginning of such interest
period. If both the Telerate and Reuters systems are unavailable, then the rate
for that date will be determined on the basis of the offered rates for deposits
in U.S. dollars for a period of time comparable to such LIBOR Rate Advance which
are offered by four (4) major banks in the London interbank market at
approximately 11:00 a.m. (London time), on the day that is two (2) London
Banking Days preceding the first day of such LIBOR Rate Advance as selected by
the Agent. The principal London office of each of the major London Banks so
selected will be requested to provide a quotation of its U.S. dollar deposit
offered rate. If at least two (2) such quotations are provided, the rate for
that date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that date will be determined
on the basis of the rates quoted for loans in U.S. dollars to leading European
banks for a period of time comparable to such LIBOR Rate Advance offered by
major banks in New York City at approximately 11:00 a.m. (New York City time),
on the day that is two (2) London Banking Days preceding the first day of such
LIBOR Rate Advance. In the event that the Agent is unable to obtain any such
quotation as provided above, it will be determined that LIBOR pursuant to a
LIBOR Rate Advance cannot be determined. In the event that the Board of
Governors of the Federal Reserve System shall impose a Reserve Percentage with
respect to LIBOR deposits of the Agent, any Lender or any Affiliate thereof then
for any period during which such Reserve Percentage shall apply, LIBOR shall be
equal to the amount determined above divided by an amount equal to 1 minus the
Reserve Percentage.
"LIBOR Rate Advance" means any Revolving Advance or principal portion
of any other Loan that bears interest with reference to LIBOR.
"LIBOR Spread" means that term as defined in Section 2.3(a).
"Lien" means any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on common law, statute, or contract, and including but not
limited to the security interest lien arising from a security agreement,
mortgage, encumbrance, pledge, collateral assignment, conditional sale or trust
receipt, or a lease, consignment, or bailment for security purposes.
13
"Loans" means the Revolving Advances, the BV Loans, the Term Loans and
the Mortgage Loan made or to be made pursuant to this Agreement.
"Loan Documents" means this Agreement, the Amendment Agreement, the
Notes, the Security Documents and all other promissory notes, guaranties,
mortgages, security documents, deeds to secure debt, deeds of trust, pledges,
assignments, contracts, negative pledges, powers of attorney, landlord waivers,
environmental indemnity agreements, trust account agreements, and written
matters, whenever executed and delivered to Lender, with respect to the
transactions contemplated by this Agreement.
"Lockbox Account" means that term as defined in Section 2.7.
"Lockbox Agreement" means the lockbox agreement from time to time in
effect among the Borrower and the Agent.
"London Banking Day" shall mean any date on which commercial banks are
open for business in London, England.
"Make-Whole Premium" means the present value of the interest expense
incurred by a Lender in funding the portion of indebtedness evidenced by the
applicable Note which bears interest at the per annum rate of interest for the
Interest Period then in effect, less the present value of the interest on the
reinvested principal prepaid for the remainder of the Interest Period then in
effect, at the Reinvestment Rate, plus any other expenses that Lender may
sustain or incur by reason of the prepayment; provided that any negative value
resulting from the foregoing calculation will be disregarded.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related,
results in a material adverse change in, or a material adverse effect upon, any
of (i) the condition (financial or otherwise), operations, business, properties
or prospects of the Borrower and its Subsidiaries taken as a whole; (ii) the
rights and remedies of the Agent hereunder or under any of the other Loan
Documents, or the ability of the Borrower to perform its respective Obligations;
or (iii) the legality, validity or enforceability of this Agreement or any of
the other Loan Documents.
"Maturity Date" means, (i) in the case of the Revolving Credit Loan,
July 25, 2005, (ii) in the case of the 2002 Term Loan, October 1, 2007, (iii) in
the case of the 2003 Term Loan, the third anniversary of its Drawdown Date, (iv)
in the case of the BV Loan, July 25, 2005, and (v) in the case of the Mortgage
Loan, the date which is five (5) years and one (1) month following its Drawdown
Date, in each case or earlier as set forth in this Agreement.
"Mortgage Loan" means the term as defined in Section 2.2B(a).
14
"Mortgage Loan Commitment" means, for each Lender, the amount set forth
opposite such Lender's name in Schedule 2 directly below the column entitled
"Mortgage Loan Commitment," and in the aggregate, as set forth in Schedule 2
below such column in the row entitled "Total", as same may be adjusted from time
to time as a result of assignments to or from such Lender pursuant to Section
11.4.
"Mortgage Note" means the term as defined in Section 2.22(c).
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making or
accruing an obligation to make contributions or has within any of the preceding
five plan years made or accrued an obligation to make contributions.
"Non-Defaulting Lender" shall mean and include each Lender, as the case
may be, other than a Defaulting Lender.
"Notes" means collectively the Domestic Advance Notes, the Foreign
Advance Notes, the BV Notes, the 2002 Term Notes, the 2003 Term Notes and the
Mortgage Notes.
"Obligations" means all present and future indebtedness and other
liabilities of the Borrower owing to the Agent or any Lender or any of their
respective successors, transferees or assigns, of every type and description,
whether or not evidenced by any note, guaranty or other instrument, arising
under or in connection with this Agreement, the Notes or any other Loan
Document, whether or not for the payment of money, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising and however acquired. The term
includes, without limitation, all principal, interest, charges, expenses, fees,
attorneys' fees and disbursements and any other sum chargeable to the Borrower
under this Agreement or any other Loan Document.
"Overadvance" means that term as defined in Section 2.1(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" shall mean the acquisition by the Borrower or
any of its Subsidiaries of assets constituting a business, division or product
line of any Person not already a Subsidiary of Borrower or any of its
Subsidiaries or of not less than 80% (or a lesser percentage to the extent that
the laws of any jurisdiction require a minimum percentage ownership by a
resident of such jurisdiction, such minimum, the "Local Owned Stock") of the
capital stock or other equity interests of any such Person, provided, that (A)
the consideration paid by the Borrower or any Subsidiary consists solely of
cash, the issuance of common stock of Borrower, the issuance of Debt otherwise
permitted in Section 5.14 and the assumption/acquisition of any Permitted
Acquired Debt (calculated in accordance with GAAP) relating to such business,
division, product line or Person which is permitted to be assumed/acquired and
to remain outstanding in accordance with the requirements of Section 5.14, (B)
those acquisitions that are structured as stock acquisitions shall be effected
through a purchase of not less than 80% (minus,
15
if applicable, the Local Owned Stock) of the capital stock or other equity
interests of such Person by the Borrower or such Subsidiary or through a merger
between such Person and a Subsidiary of the Borrower, so that after giving
effect to such purchase or merger not less than 80% (minus, if applicable, the
Local Owned Stock) of the capital stock of the surviving corporation of such
purchase or merger is owned by the Borrower or any Subsidiary of the Borrower,
(C) in the case of the acquisition of not less than 80% (minus, if applicable,
the Local Owned Stock) of the capital stock or other equity interests of any
Person, such Person (the "Acquired Person") shall own no capital stock or other
equity interests in any other Person unless the Acquired Person owns 100%
(minus, if applicable, the Local Owned Stock) of the capital stock or other
equity interests of such other Person, (D) substantially all of the business,
division or product line acquired pursuant to the respective Permitted
Acquisition, or the business of the Person acquired pursuant to the respective
Permitted Acquisition and its Subsidiaries, is in same line of business as
Borrower or such Subsidiary (E) after giving effect to such acquisition, the
Borrower or such Subsidiary has the power to elect at least a majority of the
directors or managers of such Person and (F) all applicable requirements of
Section 5.14 applicable to the Permitted Acquisitions are satisfied.
Notwithstanding anything to the contrary contained in the immediately preceding
sentence, an acquisition which does not otherwise meet the requirements set
forth in the above definition of "Permitted Acquisition" shall constitute a
Permitted Acquisition if, and to the extent, the Required Lenders agree in
writing that such acquisition shall constitute a Permitted Acquisition for
purposes of this Agreement.
"Person" means a human being, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
association, organization, joint venture, institution, Governmental Authority,
or other entity of any nature whatsoever.
"Plan" means any plan established, maintained, or to which
contributions have been made by the Borrower or any ERISA Affiliate for the
benefit of any of their employees.
"Prime Rate" means the Agent's annual rate of interest designated by
the Agent from time to time as a standard for setting loan rates, which rate
shall not be construed as the Agent's lowest or most favorable rate on loans.
"Prime Rate Advance" means any Revolving Advance or portion of any
other Loan which bears interest with reference to the Prime Rate.
"Prohibited Transaction" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Internal Revenue Code of 1954, as amended from
time to time.
"Property" means all real property with improvements thereon owned or
leased by the Borrower.
"Q.E.P." means Q.E.P. Co., Inc.
"Receivable" means the right to payment for goods sold or leased or for
services rendered by Borrower.
16
"Reimbursement Obligations" means that term as defined in Section
2.23(e).
"Reinvestment Rate" means the rate available to Lender as determined by
Lender in its sole discretion for the investment of principal amounts prepaid
pursuant to Sections 2.1(d) and/or 2.2(d) in U.S. Treasury obligations or
domestic or eurodollar options as offered by Lender in its sole discretion for
the approximate remaining term of the Interest Period then in effect as of the
date of such prepayment.
"Release" means any spilling, leaking, migrating, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing into the environment of any Contaminant.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA.
"Required Lenders" means FCC and HSBC.
"Reserve Percentage" means for any day with respect to a LIBOR Rate
Advance, the maximum rate (expressed as a decimal) at which any lender subject
thereto is required to maintain reserves (including all basic, supplemental,
marginal or other reserves) under Regulation D of the Board of Governors of the
Federal Reserve System (or any successor or similar regulations relating to such
reserve requirements) against "Eurocurrency Liabilities" (as that term is used
in Regulation D), if such liabilities were outstanding.
"Restricted Payment" means (i) any cash or property dividend,
distribution or payment of any kind, direct or indirect, by the Borrower or any
of its Subsidiaries to any Person who now or in the future may hold an equity
interest in the Borrower or any of its Subsidiaries, whether evidenced by a
security or not, other than stock options or regular compensation or bonuses
paid to employees or directors of the Borrower and its Subsidiaries in the
ordinary course of business and consistent with past practices, (ii) any payment
on account of the purchase, redemption, retirement or other acquisition for
value of any capital stock of the Borrower or its Subsidiaries, or any other
payment or distribution made in respect thereof, either directly or indirectly,
and (ii) any management or similar fees paid or payable by the Borrower or any
of its Subsidiaries to any Person who now or in the future may, directly or
indirectly, hold an equity interest in the Borrower or any of its Subsidiaries.
"Revolving Advance" or "Revolving Advances" means Domestic Advances and
Foreign Advances.
"Revolving Loan" means the Revolving Advance or Revolving Advances made
pursuant to Section 2.1(a).
"Revolving Credit Note" means that term as defined in Section 2.1(c).
"Revolving Loan Commitment" means, for each Lender, the amount set
forth opposite such Lender's name in Schedule 2 directly below the column
entitled "Revolving Loan Commitment and in the aggregate, as set forth in
Schedule 2 below such column in the row
17
entitled "Total", as same may be (x) reduced from time to time or (y) adjusted
from time to time as a result of assignments to or from such Lender pursuant to
Section 11.4.
"SEC" means the United States Securities and Exchange Commission.
"Security Agreement" means the respective Security Agreement or Amended
and Restated Security Agreement as applicable between the Agent and each
Borrower, as amended and in effect from time to time.
"Security Documents" means the Security Agreement, all assignments of
contracts, documents or instruments in favor of the Agent, all hazardous waste
indemnity letters in favor of Lender and all other documents, contracts,
assignments, instruments and the like now or hereafter securing the Loans.
"Seller Notes" mean (i) that certain promissory note in the principal
amount of Nine Hundred Thousand and 00/100 Dollars ($900,000.00) dated as of
September 10, 1999, executed by QEP in favor of Xxxx X. Xxxxxxx, (ii) that
certain promissory note in the principal amount of One Million Six Hundred
Thousand and 00/100 Dollars ($1,600,000.00) executed by QEP in favor of Stone
Mountain Manufacturing, Inc. and (iii) the payment obligation pursuant to that
certain Agreement for the Purchase and Sale of Shares by and between Q.E.P.
Zocalis Holding LLC and Zocalis S.R.L. in the amount of One Million Two Hundred
Fifty Thousand and 00/100 Dollars ($1,250,000.00) ; and (iv) that certain
promissory note in the principal amount of AU $1,444,470.00 executed by Q.E.P.
AUST PTY. LIMITED in favor of Accessory Flooring Supplies, a partnership, dated
as of June 3, 2002.
"Senior Debt" means that term as defined in Section 7.8(i).
"Solvent" means, as to any Person, that such Person (a) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage; (b) is able to pay its debts as
they mature; and (c) owns property whose fair salable value is greater than the
amount required to pay its debts.
"Subordinated Debt Agreement" means the Subordinated Loan and Security
Agreement between the Borrower and The HillStreet Fund, L.P. relating to the
Subordinated Debt.
"Standby Letter of Credit" shall mean each irrevocable letter of credit
issued pursuant to Section 2.23(a) under which the Issuing Lender agrees to make
payments for the account of the Borrower, on behalf of the Borrower, in respect
of obligations of the Borrower incurred pursuant to contracts made or
performances undertaken or to be undertaken or like matters relating to
contracts to which the Borrower is or proposes to become a party in the ordinary
course of the Borrower's business.
"Subordinated Debt" means that term as defined in Section 7.8(j).
"Subsidiary" means any Person of which the Borrower directly or
indirectly through one or more intermediaries (i) owns shares of stock having
ordinary voting power to elect a majority
18
of the Board of Directors (or equivalent managing body) of such Person
(irrespective of whether at the time stock of any other class or classes of such
Person shall or might have voting power
19
upon the occurrence of any contingency), or (ii) owns more than 50% of any other
equity or ownership interest in such Person.
"Tangible Capital Base" means that term as defined in Section 7.8(k).
"Tangible Net Worth" means that term as defined in Section 7.8(l).
"Term Loan Commitment" means for each Lender, the amount set forth
opposite such Lender's name in Schedule 2 directly below the column entitled
"2002 Term Loan Commitment" and "2003 Loan Commitment, and in the aggregate, as
set forth in Schedule 2 below such columns in the row entitled "Total" as the
same may be adjusted from time to time as a result of assignments to or from
such Lender pursuant to Section 11.4.
"2002 Term Loan" means that term as defined in Section 2.2(a).
"2002 Term Note" means that term as defined in Section 2.2(b).
"2003 Term Loan" means that term as defined in Section 2.2A(a).
"2003 Term Note" means that term as defined in Section 2.2A(b).
"Total Liabilities" means that term as defined in Section 7.8(m).
"Trade Letter of Credit" shall mean each commercial documentary Letter
of Credit issued by the Issuing Lender for the account of the Borrower pursuant
to Section 2.23(a) for the purchase of goods in the ordinary course of business.
"Type" refers to whether a Revolving Advance or principal portion of
any other Loan is a Prime Rate Advance or LIBOR Rate Advance.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of Connecticut, as amended or otherwise modified and in effect from time to
time.
Section 1.2 Terms Generally. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation". All references herein to Articles, Sections,
Exhibits and Schedules shall be deemed references to Articles and Sections of,
and Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, (a) any reference in
this Agreement to any Loan Document shall mean such document as amended,
restated, supplemented or otherwise modified from time to time, and (b) all
terms of an accounting or financial nature shall be construed in accordance with
GAAP, as in effect from time to time.
Section 1.3 Currency Equivalents Generally. For all purposes of this
Agreement other than Article 2, the equivalent in any Alternative Currency of an
amount in dollars shall be determined at the rate of exchange quoted by the
Agent in Boston, Massachusetts, at 9:00 A.M.
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(Boston time) on the date of determination, to prime banks in New York City for
the spot purchase in the New York foreign exchange market of such amount of
dollars with such Alternative Currency.
ARTICLE 2
AMOUNTS AND TERMS OF THE LOANS
A. THE LOANS
Section 2.1 Revolving Loan.
(a) In Lenders' sole discretion and subject to the terms and
conditions set forth in this Agreement, Lenders severally, but not jointly,
agree to make advances (each a "Revolving Advance" and collectively "Revolving
Advances") to Borrower from time to time during the period from the date of this
Agreement up to, but not including, the Maturity Date; provided, however, that
at no time shall the aggregate outstanding principal balance of all Revolving
Advances plus the Available Amount plus any unpaid Reimbursement Obligations
exceed the Credit Availability. Subject to the limits of this Agreement,
Borrower may borrow, pay, prepay (pursuant to Section 2.1(d) below), and
re-borrow under this Section 2.1. Nothing herein shall be construed to require
any Lender to make Revolving Advances, it being agreed that such Revolving
Advances and any formulas or advance rates contained within or comprising the
Borrowing Base shall be at the Agent's sole discretion, may be increased or
decreased in accordance with the definition of Borrowing Base and from time to
time by the Agent in its sole discretion and shall not establish a pattern or
custom binding upon the Agent or any Lender.
(b) Notwithstanding the provisions of Section 2.1(a), the Required
Lenders may, in their sole discretion and subject to the terms and conditions
set forth in this Agreement or any other conditions which the Lenders may impose
in their sole discretion, including without limitation the payment of fees, an
increased interest rate, or posting of additional collateral, make temporary
advances in excess of the Borrowing Base to Borrower from time to time (each
such temporary Revolving Advance is referred to herein as an "Overadvance"),
provided that in no event shall the aggregate principal amount of outstanding
Overadvances, when combined with the outstanding principal amount of all other
Revolving Advances plus the Available Amount plus any unpaid Reimbursement
Obligations, exceed the Revolving Loan Commitment. To the extent that the
Borrowing Base increases at any time during which an Overadvance is outstanding,
the portion of the Overadvance which, as a result of such increase, would be
available for borrowing under Section 2.1(a) shall be deemed to be prepaid as of
the date of such increase and reborrowed as a Revolving Advance under Section
2.1(a) as of such date. To the extent that the Borrowing Base decreases at any
time, the portion of the outstanding Revolving Advances which exceeds the
Borrowing Base as a result of such decrease shall be deemed, subject to the
provisions of this Agreement, to be prepaid as of the date of such decrease and
reborrowed as an Overadvance under this Section 2.1(b) as of such date. Nothing
contained in this Section 2.1(b) or elsewhere in this Agreement shall constitute
or be deemed to constitute a commitment or agreement by the Lenders to make any
Overadvances, nor shall the making of an
21
Overadvance at any time or from time to time constitute or be deemed to
constitute a course of dealing by the Agent or any Lender with respect to
Overadvances.
(c) All Revolving Advances shall be evidenced by, and repaid with
interest in accordance with one or more promissory notes of Borrower, each
substantially in the form of Exhibit A hereto (each such promissory note is
referred to herein as a "Revolving Credit Note"). The Revolving Note issued to
each Lender shall (i) be executed by the Borrower, (ii) be payable to such
Lender or its registered assigns and be dated the date of this Agreement, (iii)
be in a stated principal amount equal to the Revolving Loan Commitment of such
Lender and be payable in the outstanding principal amount of the Revolving Loans
evidenced thereby, (iv) mature on the Maturity Date, (v) bear interest as
provided in the appropriate clause of Section 2.3 in respect of the Prime Rate
Advances and LIBOR Rate Advances, as the case may be, evidenced thereby, and
(vi) be entitled to the benefits of this Agreement and the other Loan Documents.
Borrower hereby authorizes each Lender to record on its Revolving Credit Note or
in its internal computerized records the amount of each Revolving Advance and of
each payment of principal received by such Lender on account of the Revolving
Loan, which recordation shall, in the absence of manifest error, be conclusive
as to the outstanding principal balance of the Revolving Loan and shall be
considered correct and binding on Borrower provided, however, that the failure
to make such recordation with respect to any Revolving Advance or payment shall
not limit or otherwise affect the obligations of Borrower under this Agreement
or the Revolving Credit Note.
(d) Borrower may prepay the Revolving Loan, in whole or in part,
together with accrued interest to the date of prepayment on the amount prepaid
(i) with respect to any principal portion that bears interest with reference to
the Prime Rate, on any Business Day, without Make-Whole Premium, and (ii) with
respect to any principal portion that bears interest with reference to LIBOR
either (1), on the last Business Day of the Interest Period applicable to the
portion being prepaid, without Make-Whole Premium or (2) on any other Business
Day, together with the Make-Whole Premium.
(e) Until the Agent exercises its rights to collect the Receivables
as provided for in this Agreement, Borrower may continue its present policies
for returned merchandise and adjustments, but shall promptly notify the Agent of
any credits, adjustments or disputes arising about the goods or services
represented by Receivables. In any event, Borrower will immediately pay the
Agent from its own funds (and not from the proceeds of Receivables), for
application to the Revolving Loans, an amount equal to any credit or adjustment
made to any Eligible Receivables; provided, however, that so long as Borrower is
not in default hereunder, such payment need not be made if Borrower shall have,
after making such credit or adjustment, sufficient Eligible Receivables to
maintain the aggregate outstanding balance of the Revolving Loans under the
Borrowing Base.
Section 2.1A. BV Loan.
(a) In their sole discretion and subject to the terms and conditions
set forth in this Agreement, the Lenders severally, but not jointly, agree to
make advances (each a "BV Advance" and collectively "BV Advances") to BV from
time to time during the period from the
22
date of this Agreement up to, but not including, the Maturity Date; provided,
however, that at no time shall the aggregate outstanding principal balance of
all BV Advances exceed the Credit Availability. Subject to the limits of this
Agreement, BV may borrow, pay, prepay (pursuant to Section 2.1A(d) below), and
re-borrow under this Section 2.1.A. Nothing herein shall be construed to require
any Lender to make BV Advances, it being agreed that such BV Advances and any
formulas or advance rates contained within or comprising the Borrowing Base
shall be at the Agent's sole discretion, may be increased or decreased at any
time and from time to time by the Agent in its sole discretion and shall not
establish a pattern or custom binding upon any Lender. For purposes of this
Section 2.1A(a) and all other provisions of this Article 2, the equivalent in
dollars of any Alternative Currency or the equivalent in any Alternative
Currency of dollars or of any other Alternative Currency shall be determined in
accordance with Section 2.16A.
(b) Notwithstanding the provisions of Section 2.1A(a), the Required
Lenders may, in their sole discretion and subject to the terms and conditions
set forth in this Agreement or any other conditions which the Agent may impose
in its sole discretion, including without limitation the payment of fees, an
increased interest rate, or posting of additional collateral, make temporary
advances in excess of the BV Borrowing Base from time to time (each such
temporary BV Advance is referred to herein as an "Overadvance"), provided that
in no event shall the aggregate principal amount of outstanding Overadvances,
when combined with the outstanding principal amount of all other BV Advances
exceed the BV Sublimit. To the extent that the BV Borrowing Base increases at
any time during which an Overadvance is outstanding, the portion of the
Overadvance which, as a result of such increase, would be available for
borrowing under Section 2.1A(a) shall be deemed to be prepaid as of the date of
such increase and reborrowed as a BV Advance under Section 2.1A(a) as of such
date. To the extent that the BV Borrowing Base decreases at any time, the
portion of the outstanding BV Revolving Advances which exceeds the BV Borrowing
Base as a result of such decrease shall be deemed, subject to the provisions of
this Agreement, to be prepaid as of the date of such decrease and reborrowed as
an Overadvance under this Section 2.1A(b) as of such date. Nothing contained in
this Section 2.1A(b) or elsewhere in this Agreement shall constitute or be
deemed to constitute a commitment or agreement by the Agent or any Lender to
make any Overadvances, nor shall the making of an Overadvance at any time or
from time to time constitute or be deemed to constitute a course of dealing by
the Agent or any Lender with respect to Overadvances.
(c) All BV Advances shall be evidenced by, and repaid with interest
in accordance with one or more promissory notes of BV, each in the form of
Exhibit A-1 hereto (each such promissory note is referred to herein as a "BV
Note"). The BV Note issued to each Lender shall (i) be executed by BV, (ii) be
payable to such Lender or its registered assigns and be dated the date of this
Agreement, (iii) be in a stated principal amount equal to the BV Loan Commitment
of such Lender and be payable in the outstanding principal amount of the BV
Loans evidenced thereby, (iv) mature on the Revolving Loan Maturity Date, (v)
bear interest as provided in the appropriate clause of Section 2.3 in respect of
the Prime Rate Advances and LIBOR Rate Advances, as the case may be, evidenced
thereby, and (vi) be entitled to the benefits of this Agreement and the other
Loan Documents. BV hereby authorizes the Agent to record on the BV Note or in
its internal computerized records the amount of each BV Advance and of each
payment of principal received by Lender on account of the BV Loan, which
recordation shall, in
23
the absence of manifest error, be conclusive as to the outstanding principal
balance of the BV Loan and shall be considered correct and binding on BV
provided, however, that the failure to make such recordation with respect to any
BV Advance or payment shall not limit or otherwise affect the obligations of BV
under this Agreement or the BV Note.
(d) BV may prepay the BV Loan, in whole or in part, together with
accrued interest to the date of prepayment on the amount prepaid either (1) on
the last Business Day of the Interest Period applicable to the portion being
prepaid, without Make-Whole Premium or (2) on any other Business Day, together
with the Make-Whole Premium.
(e) Until the Agent exercises its rights to collect the Receivables
as provided for in this Agreement, BV may continue its present policies for
returned merchandise and adjustments, but shall promptly notify the Agent of any
credits, adjustments or disputes arising about the goods or services represented
by Receivables. In any event, BV will immediately pay the Agent from its own
funds (and not from the proceeds of Receivables), for application to the BV
Loans, an amount equal to any credit or adjustment made to any Eligible BV
Receivables; provided, however, that so long as BV is not in default hereunder,
such payment need not be made if BV shall have, after making such credit or
adjustment, sufficient Eligible BV Receivables to maintain the aggregate
outstanding balance of the BV Loans under the BV Borrowing Base.
(f) With respect to the BV Loan, BV shall pay to the Lender a fee on
the first day of each month, and on the Maturity Date, in an amount equal to
one-quarter of one percent (.25%) per annum of the difference between the BV
Sublimit and the average daily outstanding principal balance of the BV Loan for
the prior one-month period. For purposes of determining the unused portion of
the BV Sublimit, the equivalent dollars of each BV Advance made by Lender in an
Alternative Currency as determined on the date of the making of such BV Advance
shall be the amount of the BV Sublimit used in connection with such BV Advance,
and no further adjustments shall be made with respect to the unused portion of
the BV Sublimit based upon fluctuations thereafter in the value of the
Alternative Currency of such BV Advance.
Section 2.1B. Foreign Loan.
(a) In Lenders' sole discretion and subject to the terms and
conditions set forth in this Agreement, each Lender agrees, severally and not
jointly, to make advances (each a "Foreign Advance" and collectively, "Foreign
Advances") to the Foreign Companies from time to time during the period from the
date of this Agreement up to, but not including, the Maturity Date; provided,
however, that at no time shall the aggregate outstanding principal balance of
all Foreign Advances exceed the Foreign Borrowing Base. Subject to the limits of
this Agreement, the Foreign Companies may borrow, pay, prepay (pursuant to
Section 2.1B(d) below), and re-borrow under this Section 2.1B. Nothing herein
shall be construed to require any Lender to make Foreign Advances, it being
agreed that such Foreign Advances and any formulas or advance rates contained
within or comprising the Borrowing Base shall be at the Agent's sole discretion,
may be increased or decreased at any time and from time to time by the Agent it
its sole discretion and shall not establish a pattern or custom binding upon the
Agent. For purposes of this Section 2.1B(a) and all other provisions of this
Article 2, the equivalent in dollars or of any other Alternative Currency shall
be determined in accordance with Section 2.16A.
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(b) Notwithstanding the provisions of this Section 0.xX(a), the
Required Lenders may, in their sole discretion and subject to the terms and
conditions set forth in this Agreement or any other conditions which the Agent
may impose in its sole discretion, including, without limitation, the payment of
fees, an increased interest rate, or posting of additional collateral, make
temporary advances in excess of the Foreign Borrowing Base from time to time
(each such temporary Foreign Advance is referred to herein as a "Foreign
Overadvance"), provided that in no event shall the aggregate principal amount of
outstanding Foreign Overadvances, when combined with the outstanding principal
amount of all other Foreign Advances, exceed the Foreign Sublimit. To the extent
that the Foreign Borrowing Base increases at any time during which a Foreign
Overadvance is outstanding, the portion of the Foreign Overadvance which, as a
result of such increase, would be available for borrowing under Section 2.1B(a)
shall be deemed to be prepaid as of the date of such increase and reborrowed as
a Foreign Advance under Section 2.1B(a) as of such date. To the extent that the
Foreign Borrowing Base decreases at any time, the portion of the outstanding
Foreign Advances, which exceeds the Foreign Borrowing Base as a result of such
decrease shall be deemed, subject to the provisions of this Agreement, to be
prepaid as of the date of such decrease and reborrowed as a Foreign Overadvance
under this Section 2.1B(b) as of such date. Nothing contained in this Section
2.1B(b) or elsewhere in this Agreement shall constitute or be deemed to
constitute a commitment or agreement by the Agent or any Lender to make any
Foreign Overadvances, nor shall the making or a Foreign Overadvance at any time
or from time to time constitute or be deemed to constitute a course of dealing
by the Agent or any Lender with respect to Foreign Overadvances.
(c) All Foreign Advances shall be evidenced by, and repaid with
interest in accordance with one or more promissory notes of Borrower, each in
the form of Exhibit A-2 hereto (each such promissory note is referred to herein
as a "Foreign Note"). The Foreign Note issued to each Lender that has a
Revolving Loan Commitment or outstanding Revolving Loans shall (i) be executed
by the Foreign Companies, (ii) be payable to such Lender or its registered
assigns and be dated the date of the Agreement, (iii) be in a stated principal
amount equal to the Revolving Loan Commitment of such Lender applicable to
Foreign Loans and be payable in the outstanding principal amount of the Foreign
Loans evidenced thereby, (iv) mature on the Revolving Loan Maturity Date, (v)
bear interest as provided in the appropriate clause of Section 2.3 in respect of
the Prime Rate Advances and LIBOR Rate Advances, as the case may be, evidenced
thereby, (vi) be entitled to the benefits of this Agreement and the other Loan
Documents. The Foreign Companies hereby authorize each Lender to record on the
Foreign Note or in its internal computerized records the amount of each Foreign
Advance and of each payment of principal received by such Lender on account of
the Foreign Loan, which recordation shall, in the absence of manifest error, be
conclusive evidence as to the outstanding principal balance of the Foreign Loan
and shall be considered correct and binding on the Foreign Companies, provided,
however, that the failure to make such recordation with respect to any Foreign
Advance or payment shall not limit or otherwise affect the obligations of the
Foreign Companies under this Agreement or the Foreign Note.
(d) The Foreign Companies may prepay the Foreign Loan, in whole or
in part, together with accrued interest to the date of prepayment on the amount
prepaid either (1) on the
25
last Business Day of the Interest Period applicable to the portion being
prepaid, without Make-Whole Premium or (2) on any other Business Day, together
with the Make-Whole Premium.
(e) Until the Agent exercises its right to collect the Receivables
as provided for in this Agreement, the Foreign Companies may continue their
present policies for returned merchandise and adjustments, but shall promptly
notify Lender of any credits, adjustments or disputes arising about the goods or
services represented by Receivables. In any event, the Foreign Companies will
immediately pay Lender from its own funds (and not from the proceeds of
Receivables), for application to the Foreign Loans, an amount equal to any
credit or adjustment made to any Eligible Foreign Receivables; provided,
however, that so long as the Foreign Companies are not in default hereunder,
such payment need not be made if the Foreign Companies shall have, after making
such credit or adjustment, sufficient Eligible Foreign Receivables to maintain
the aggregate outstanding balance of the Foreign Loans under the Foreign
Borrowing Base.
(f) Unless a commitment for Foreign Advances is established other
than as a sublimit of the Commitment, then there shall not be an unused line fee
for Foreign Loans. Upon the establishment, if any, of such a separate
commitment, then Borrower shall, without duplicating any unused line fees paid
with respect to Domestic Advances pay to the Agent, for the ratable benefit of
the Lenders, a fee on the first day of each month, and on the Maturity Date, an
unused line fee in an amount equal to one-quarter of one percent (.25 %) per
annum of the difference between the Commitment established solely for Foreign
Advances, if any, and the average daily outstanding principal balance of the
Foreign Advances for the prior one month period. For purposes of determining the
unused portion of the Commitment, the equivalent dollars of each Foreign Advance
made by a Lender in an Alternative Currency as determined on the date of the
making of such Foreign Advance shall be the amount of the Commitment used in
connection with such Foreign Advance, and no further adjustments shall be made
with respect to the unused portion of the Commitment based upon fluctuations
thereafter in the value of the Alternative Currency or such Foreign Advance.
(g) Notwithstanding anything to the contrary contained in this
Section 2.1B or elsewhere in this Agreement or in any Loan Document, no Foreign
Advances shall be made at any time at which (i) the sum of (1) the Commitment
(with respect to both Revolving Advances and BV Advances), (2) the outstanding
principal balances of the 2002 Term Loan, 2003 Term Loan and the Mortgage Loan
and (3) the amount of the proposed Foreign Advance equals or exceeds the
Borrowing Base (before giving effect to the definition of Excess Borrowing Base)
or (ii) the Required Lenders determine in their sole discretion not to make such
Foreign Advance.
Section 2.2 2002 Term Loan.
(a) Subject to the terms and conditions set forth in this Agreement,
the Lenders shall, on the date hereof, make a term loan to Borrower (the "2002
Term Loan") in an original principal amount of Four Million ($4,000,000) U.S.
Dollars.
(b) The 2002 Term Loan shall be evidenced by, and repaid in
accordance with one or more promissory notes of Borrower, each substantially in
the form attached hereto as Exhibit B
26
(each such note a "2002 Term Note"). The 2002 Term Note issued to each Lender
that has a Term Loan Commitment or outstanding Term Loans shall (i) be executed
by the Borrower, (ii) be payable to such Lender or its registered assigns and be
dated the date of this Agreement, (iii) be in a stated principal amount equal to
the 2002 Term Loan made by such Lender and be payable in the outstanding
principal amount of 2002 Term Loans evidenced thereby, (iv) mature on the
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 2.3 in respect of the Prime Rate Advances and LIBOR Rate Advances, as
the case may be, evidenced thereby, and (vi) be entitled to the benefits of this
Agreement and the other Loan Documents.
(c) Borrower shall make mandatory scheduled principal payments under
the Term Notes quarterly in the aggregate amount of (i) $400,000.00 per calendar
quarter, commencing January 1, 2003 and continuing on the first day of each
succeeding quarter thereafter through and including October 1, 2003 and (ii)
$200,000.00 per calendar quarter, commencing January 1, 2004 and continuing on
the final day of each succeeding quarter thereafter until the outstanding
principal amount of the 2002 Term Loan, together with all interest accrued
thereon, has been fully paid, except that if not sooner paid, the principal
amount, together with all accrued but unpaid interest thereon, shall be due and
payable on the Maturity Date.
(d) Borrower may prepay any portion of the outstanding principal of
the Term Loan, in whole or in part, together with accrued interest to the date
of such prepayment on the amount prepaid and all amounts required pursuant to
Section 2.19 hereof, (i) with respect to any principal portion that bears
interest with reference to the Prime Rate, on any Business Day, without
Make-Whole Premium, and (ii) with respect to any principal portion that bears
interest with reference to LIBOR either (1) on the last Business Day of the
Interest Period applicable to the portion of the Term Loan being prepaid,
without Make-Whole Premium or (2) on any other Business Day, together with the
Make-Whole Premium.
Section 2.2A 2003 Term Loan.
(a) Subject to the terms and conditions set forth in this Agreement,
the Lenders shall, on or about May 2003, but in no event later than May 31, 2004
make a term loan to Borrower (the "2003 Term Loan") in an original principal
amount of Four Million Five Hundred Thousand U.S. Dollars ($4,500,000).
(b) The 2003 Term Loan shall be evidenced by, and repaid in
accordance with one or more promissory notes of Borrower, each substantially in
the form attached hereto as Exhibit C (the "2003 Term Note"). The 2003 Term Note
issued to each Lender shall (i) be executed by the Borrower, (ii) be payable to
such Lender or its registered assigns and be dated the Drawdown Date of the 2003
Term Loan, (iii) be in a stated principal amount equal to the Term Loans made by
such Lender and be payable in the outstanding principal amount of Term Loans
evidenced thereby, (iv) mature on the 2003 Maturity Date, (v) bear interest as
provided in the appropriate clause of Section 2.03 in respect of the Prime Rate
Advances and LIBOR Rate Advances, as the case may be, evidenced thereby, (vi) be
entitled to the benefits of this Agreement and the other Loan Documents.
27
(c) Commencing on the first day of the month following the Drawdown
Date of the 2003 Term Loan and continuing on the first business day of each
succeeding calendar month thereafter, Borrower shall make mandatory scheduled
principal payments under the 2003 Term Note quarterly in the amount of
$125,000.00 per month for the first five (5) months and $141,667 per month
thereafter, in each case plus interest on the outstanding principal balance as
stated in the 2003 Term Note, until the outstanding principal amount of the 2003
Term Note, together with all interest accrued thereon, has been fully paid,
except that if not sooner paid, the principal amount, together with all accrued
but unpaid interest thereon, shall be due and payable on the Maturity Date for
the 2003 Term Loan.
(d) Borrower may prepay any portion of the outstanding principal of
the 2003 Term Loan, in whole or in part, together with accrued interest to the
date of such prepayment on the amount prepaid and all amounts required under
Section 2.19 hereof, (i) with respect to any principal portion that bears
interest with reference to the Prime Rate, on any Business Day, without
Make-Whole Premium, and (ii) with respect to any principal portion that bears
interest with reference to LIBOR either (1) on the last Business Day of the
Interest Period applicable to the portion of the 2003 Term Loan being prepaid,
without Make-Whole Premium or (2) on any other Business Day, together with the
Make-Whole Premium.
Section 2.2B Mortgage Loan.
(a) Subject to the terms and conditions set forth in this Agreement,
the Lenders shall, on or about January 2003, make a term loan to Borrower (the
"Mortgage Loan") in an original principal amount of One Million Three Hundred
Seventy Five Thousand U.S. Dollars ($1,375,000).
(b) The Mortgage Loan shall be evidenced by, and repaid in
accordance with one or more promissory notes of Borrower, each substantially in
the form attached hereto as Exhibit D (the "Mortgage Note"). The Mortgage Note
issued to each Lender shall (i) be executed by the Borrower, (ii) be payable to
such Lender or its registered assigns and be dated the date of this Agreement
(iii) be in a stated principal amount equal to the Mortgage Loans made by such
Lender on date of this Agreement and be payable in the outstanding principal
amount of Mortgage Loans evidenced thereby, (iv) mature on the Maturity Date,
(v) bear interest as provided in the appropriate clause of Section 2.3 in
respect of the Prime Rate Advances and LIBOR Rate Advances, as the case may be,
evidenced thereby, (vi) be entitled to the benefits of this Agreement and the
other Loan Documents.
(c) Commencing on the first business day of the month immediately
following the Drawdown Date of the Mortgage Loan, and continuing on the first
business day of each succeeding calendar month thereafter, Borrower shall make
mandatory scheduled principal payments under the Mortgage Note monthly in the
aggregate amount of $5,550.00 per month, with a final balloon payment of
$1,042,000 on the Maturity Date in each case plus interest on the outstanding
principal balance as stated in the Mortgage Note, until the outstanding
principal amount of the Mortgage Note, together with all interest accrued
thereon, has been fully paid, except that if not sooner paid, the principal
amount, together with all accrued but unpaid interest thereon, shall be due and
payable on the Maturity Date for the Mortgage Loan.
28
(d) Borrower may prepay any portion of the outstanding principal of
the Mortgage Loan, in whole or in part, together with accrued interest to the
date of such prepayment on the amount prepaid and all amounts required under
Section 2.19 hereof, (i) with respect to any principal portion that bears
interest with reference to the Prime Rate, on any Business Day, without
Make-Whole Premium, and (ii) with respect to any principal portion that bears
interest with reference to LIBOR either (1) on the last Business Day of the
Interest Period applicable to the portion of the Mortgage being prepaid, without
Make-Whole Premium or (2) on any other Business Day, together with the
Make-Whole Premium. Notwithstanding the foregoing, except as required by Section
2.20 (in which case payment shall be accompanied by payment of all taxes then
required under Section 2.9), in no event shall Borrower pay or prepay more than
twenty-five percent (25%) of the original principal amount of the Mortgage Loan
on or prior to the fifth anniversary of the Drawdown Date of the Mortgage Loan.
Section 2.3 Interest Provisions.
(a) Commencing with the first such date following the date of this
Agreement, Borrower promises to pay interest to the Agent, on the outstanding
and unpaid principal balances of each of the Revolving Loan and the 2002 Term
Loan, at a rate per annum equal to, at the option of Borrower, (i) the Prime
Rate or (ii) the LIBOR Rate plus the LIBOR Spread (the "LIBOR Spread") as set
forth in the following table:
--------------------------------------------------------------------
Fixed Charge Coverage Ratio (calculated,
for purposes of this pricing grid only,
using amortization of $200,000 per
quarter for the 2002 Term Loan and
$125,000 per month for the 2003 Term LIBOR Spread
Loan)
--------------------------------------------------------------------
**** 1.1 - * 1.2 225 basis points
--------------------------------------------------------------------
**** 1.2 - *** 1.5 200 basis points
--------------------------------------------------------------------
**** 1.5 - *** 1.75 175 basis points
--------------------------------------------------------------------
**** 1.75 x 150 basis points
--------------------------------------------------------------------
* Less than
*** Less than or equal to
**** Greater than or equal to
Changes in the LIBOR Spread resulting from a change in the above ratios shall
become effective on the due date of delivery by the Borrower of a compliance
certificate evidencing such change. If the Borrower shall fail to timely deliver
a compliance certificate within five days of such certificate's due date in
accordance with Section 5.8(c) of this Agreement, the LIBOR Spread shall be 225
basis points from the day such certificate was due until the day a certificate
evidencing a lower LIBOR Spread is actually delivered to the Lender. Each
Revolving Advance shall be comprised entirely of a Prime Rate Advance or a LIBOR
Rate Advance as Borrower may request pursuant to Section 2.4. Borrower shall not
be entitled to request any Revolving
29
Advance which, if made, would result in more than six (6) LIBOR Rate Advances
outstanding hereunder at any time. For purposes of the foregoing, LIBOR Rate
Advances having different Interest Periods, regardless of whether they commence
on the same date, shall be considered separate LIBOR Rate Advances. Each LIBOR
Rate Advance shall be in a principal amount of $500,000 (or the equivalent in an
Alternative Currency) or in $50,000 (or the equivalent in an Alternative
Currency) increments in excess thereof. As of the date of this Agreement, the
LIBOR Spread is 200 basis points.
Interest payments shall be made (i) in the case of Prime Rate Advances,
on the first day of each month in arrears, and (ii) in the case of LIBOR Rate
Advances, on the last day of each applicable Interest Period, or in the case of
Interest Periods having a duration of more than three (3) months, on each
three-month anniversary date of the commencement of such Interest Period.
Commencing with the first such date following the Drawdown Date of the
2003 Term Loan, Borrower promises to pay interest to the Lenders, on the
outstanding and unpaid principal balance of the 2003 Term Loan, at a rate per
annum equal to, at the election of Borrower (i) the Prime Rate plus 125 basis
points, or (ii) the LIBOR Rate plus 325 basis points.
Commencing with the first such date following the date of this
Agreement, Borrower promises to pay interest to the Lenders, on the outstanding
and unpaid principal balance of the Mortgage Loan, at a rate per annum equal to,
at the election of Borrower (i) the Prime Rate or (ii) the LIBOR Rate plus 200
basis points.
(b) For purposes of the computation of interest, and notwithstanding
anything to the contrary contained in this Agreement, items shall not be deemed
to be collected until one (1) day after their actual receipt by Lender.
(c) The interest rate on each Prime Rate Advance shall change when
and as the Agent's Prime Rate changes. Any change in the interest rate resulting
from a change in the Prime Rate shall become effective as of the opening of
business on the day on which such change in the Prime Rate shall become
effective.
(d) Overdue principal and interest and, upon the occurrence and
during the continuance of an Event of Default, all principal and accrued but
unpaid interest shall bear interest until paid in full, payable on demand, at
the Default Rate, provided that with respect to the Mortgage Loan, the Default
Rate shall be charged to the extent permitted by applicable law.
(e) The Agent may collect for the ratable benefit of the Lenders a
"late charge" equal to two percent (2%) of any installment of interest or
principal or any other amount due hereunder which is not paid or reimbursed by
Borrower within fifteen (15) days of the due date thereof to cover the extra
expense involved in handling such delinquent payment.
(f) For the purpose of complying with the Interest Act (Canada), it
is expressly stated that where interest is calculated pursuant hereto at a rate
based upon a 360-day period (for the purposes of this subsection, the "first
rate"), the yearly rate or percentage of interest to which the first rate is
equivalent is the first rate multiplied by the actual number of days in the
calendar year
30
in which the same is to be ascertained and divided by 360, and the parties
hereto acknowledge that there is a material distinction between the nominal and
effective rates of interest and that they are capable of making the calculations
necessary to compare such rates and that the calculations herein are to be made
using the nominal rate method and not on any basis that gives effect to the
principle of deemed reinvestment of interest.
Section 2.4 Notice and Manner of Borrowing; Conversion or
Continuation of Interest Rate.
(a) Borrower shall give the Agent irrevocable notice by telecopy or
otherwise in writing of its request that the Lenders make a Revolving Advance or
a BV Advance (each a "Borrowing Request") not later than 11:00 a.m. Connecticut
time (i) in the case of Prime Rate Advances, on the proposed Drawdown Date
thereof, and (ii) in the case of LIBOR Rate Advances, two (2) Business Days
prior to the proposed Drawdown Date thereof. Notice received by the Agent after
11:00 a.m. Connecticut time shall be loaned against by the Agent on the next
Business Day after the proposed Drawdown Date. Each such notice shall, in the
case of a LIBOR Rate Advance, specify the duration of the Interest Period
therefor. If no election is made in a Borrowing Request as to the Type
applicable to any Revolving Advance or BV Advance, then the requested Revolving
Advance or BV Advance shall be a Prime Rate Advance. If no election is made in a
Borrowing Request as to the Interest Period applicable to any requested LIBOR
Rate Advance, then the Interest Period applicable to such requested LIBOR Rate
Advance shall (subject to the provisions contained in the definition of
"Interest Period" in Section 1.1) be one month in duration. Subject to the
fulfillment of the applicable conditions set forth in Article 3 hereof, the
Agent will make the Revolving Advance or BV Advance in immediately available
funds by crediting the amount thereof to Borrower's account with the Agent.
(b) Provided that no Event of Default shall have occurred and be
continuing, the Borrower may, on any Business Day, convert any outstanding Prime
Rate Advance to a LIBOR Rate Advance in the same aggregate principal amount and
convert a LIBOR Rate Advance to a Prime Rate Advance only on the last Business
Day of the then current Interest Period applicable to such Revolving Advance or
BV Advance. If the Borrower desires to convert a Prime Rate Advance or a LIBOR
Rate Advance pursuant to this Section, it shall give the Lender not less than
three (3) Business Days' prior written notice, specifying the date of such
conversion, the amount to be converted and if conversion is from a Prime Rate
Advance to a LIBOR Rate Advance, the duration of the first Interest Period
therefor. If, not less than three (3) Business Days prior to the end of the
Interest Period then in effect for any LIBOR Rate Advance, Borrower shall not
have delivered to Lender (i) a notice requesting conversion of a LIBOR Rate
Advance to a Prime Rate Advance in accordance with this Section or (ii) a
Borrowing Request requesting that such Revolving Advance be reborrowed as a
Revolving Advance or BV Advance of the same Type having an Interest Period of
the same or a different duration then the Interest Period in effect, in
accordance with Section 2.4(a), or (iii) a notice that such Revolving Advance or
BV Advance is to be paid at the end of such Interest Period, then, in each such
case, Borrower shall be deemed to have delivered a notice that such Revolving
Advance or BV Advance is to be converted to a Prime Rate Advance pursuant to
this Section 2.4.
31
Section 2.5 Excess Advances. Except to the extent that any excess
constitutes an Overadvance permitted by Section 2.1(b), 2.1A(b), or 2.1B(b) if
at any time the aggregate outstanding principal amount of the Revolving Loan
plus the Available Amount plus any unpaid Reimbursement Obligations exceeds the
Credit Availability, Borrower shall immediately pay the amount of such excess to
the Agent for application to the applicable Loan.
Section 2.6 Settlements. On Friday of each week, the Agent shall
notify HSBC of its pro rata share, based upon its percentage of Revolving Loans
and BV Loans, of all such Loans outstanding as of such date. HSBC shall make
available such pro rata portion to the Agent not later than 1:00 (Hartford,
Connecticut time) that day. All such amounts will be made available in lawful
money of the United States in immediately available funds at the Head Office of
the Agent. Unless the Agent shall have been notified by any Lender prior to such
day that such Lender does not intend to make available to the Agent such
Lender's portion of such loans, the Agent may assume that such Lender has made
such amount available to the Administrative Agent on such day and the Agent may
(but shall not be obligated to), in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such corresponding amount
is not in fact made available to the Agent by such Lender, the Agent shall be
entitled to recover such corresponding amount on demand from such Lender. If
such Lender does not pay such corresponding amount forthwith upon the Agent's
demand therefor, the Agent shall promptly notify the Borrower and the Borrower
shall immediately pay such corresponding amount to the Agent. The Agent also
shall be entitled to recover on demand from such Lender or the Borrower, as the
case may be, interest on such corresponding amount in respect of each day from
the date such corresponding amount was made available by the Agent to the
Borrower until the date such corresponding amount is recovered by the Agent, at
a rate per annum equal to (i) if recovered from such Lender, the overnight
Federal Funds Rate for the first three days and at the interest rate otherwise
applicable to such Loans for each day thereafter and (ii) if recovered from the
Borrower, the rate of interest applicable to the respective Borrowing, as
determined pursuant to Section 2.3. Nothing in this Section 2.6 shall be deemed
to relieve any Lender from its obligation to make Loans hereunder or to
prejudice any rights which the Borrower may have against any Lender as a result
of any failure by such Lender to make Loans hereunder.
Section 2.7 Method of Payment. Borrower shall make each payment due
under this Agreement and under the Notes to the Agent at its Head Office not
later than 11:00 A.M., Connecticut time, on the date when due in lawful money of
the United States in immediately available funds. Borrower hereby authorizes the
Agent to charge from time to time (including without limitation any time at
which any amount is due under this Agreement) any amount due under this
Agreement or the Notes, including without limitation principal, interest, fees
and charges, against any account of Borrower with the Agent. Subject to the
provisions contained in the definition of Interest Period in Section 1.1,
whenever any payment to be made under this Agreement or under a Note shall be
stated to be due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall be
included in the computation of the payment of interest.
Section 2.8 Collection of Funds. All proceeds of notes,
instruments, Inventory and Receivables of Borrower shall be collected into a
lockbox account established by Borrower with the Agent pursuant to the Lockbox
Agreement (the "Lockbox Account"). Promptly after the
32
execution of this Agreement, Borrower shall direct each of its Account Debtors
to make all payments to Borrower directly into the Lockbox Account. Borrower
shall hold in trust for the Agent and immediately remit to the Agent by
depositing the same into the Lockbox Account all checks, notes, cash and other
proceeds of its Receivables as well as all proceeds from the sale of inventory,
securities (other than securities issued by Borrower) and other Collateral and
other cash receipts of every kind and nature (other than the proceeds of other
borrowings expressly permitted by this Agreement). Borrower agrees that all
payments received in the Lockbox Account will be the sole and exclusive property
of the Agent. The Agent may, in its sole discretion, on the Business Day on
which any payment is received into the Lockbox Account, and on a provisional
basis until the final receipt of good funds, credit such payments to the
principal amount of the outstanding Revolving Advances as a prepayment of such
Revolving Advances or, as applicable, BV Advances as a prepayment of such BV
Advances, provided that on any day on which the Agent does not so credit,
Borrower may, at its option, and in each case on a provisional basis until the
final receipt of good funds, credit such payment, either to (i) its account with
Lender or an Affiliate of Lender or (ii) the principal amount of the outstanding
Revolving Advances or BV Advances as a prepayment thereof. Any such provisional
credit is subject to reversal if the final collection of a payment is not
received by the Agent within five (5) Business Days following the initial
receipt of such payment and will thereafter be credited when such payment is
actually received in good funds. If at the time of any such credit there are no
outstanding Revolving Advances such credit shall (i) if a Default or an Event of
Default shall exist, be credited to a cash collateral account under the sole
dominion and control of the Agent until such Default or Event of Default is
cured by Borrower or waived by Agent or (ii) be applied to amounts due on the
2003 Term Loan, then, to amounts due on the 2002 Term Loan and then subject to
the provisions of Section 2.2B(d), to amounts due on the Mortgage Loan, in each
case in the inverse order of maturity, (iii) be applied to cash collateralize
any outstanding Letters of Credit, or (iv) otherwise be made to Borrower's
regular account with Lender.
B. CERTAIN GENERAL PROVISIONS
Section 2.9 Taxes.
(a) All payments by Borrower under the Loan Documents to or for the
account of the Agent or any Lender shall be made without setoff or counterclaim
and free and clear of, and without any deduction or withholding for or on
account of, any and all present or future income, stamp or other taxes, levies,
imposts, duties, fees, assessments, deductions, withholdings, or other charges
of whatever nature, now or hereafter imposed, levied, collected, withheld, or
assessed by any jurisdiction, or by any department, agency, state or other
political subdivision thereof or therein (collectively, "Taxes"), excluding as
to (i) a Tax on the Income imposed on the Agent or any Lender, and (ii) any
interest, fees, additions to tax or penalties for late payment thereof (each
such non-excluded Tax, an "Indemnified Tax"). For purposes hereof, "Tax on the
Income" shall mean, as to any Person, a Tax imposed by one of the following
jurisdictions or by any political subdivision or taxing authority thereof: (i)
the United States, (ii) the jurisdiction in which such Person is organized, or
(iii) the jurisdiction in which such Person's principal office is located, which
Tax is an income tax or franchise tax imposed on al or part of the net income or
net profits of such Person or which Tax represents interest, fees, or penalties
for late payment of such an income tax or franchise tax. If any such obligation
is imposed upon Borrower with
33
respect to any amount payable by it hereunder or under an of the other Loan
Documents, Borrower will pay to the Agent on the date on which such amount is
due and payable hereunder or under such other Loan Document, such additional
amount in dollars as shall be necessary to enable a Lender to receive the same
net amount which such Lender would have received on such due date had no such
obligation been imposed upon Borrower. Borrower will deliver promptly to the
Agent certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by Borrower hereunder or
under such other Loan Document.
(b) If Borrower, the Agent, any Lender or any other Person is
required by any law, rule, regulation, order, directive, treaty or guideline to
make any deduction or withholding (which deduction or withholding would
constitute an Indemnified Tax) from any amount required to be paid by any
Borrower to or on behalf of the Agent or any Lender under any Loan Document, (i)
such Borrower shall pay such Indemnified Tax before the date on which penalties
attach thereto, such payment to be made for its own account (if the liability to
pay is imposed on such Borrower) or on behalf of and in the name of the Agent or
any Lender (if the liability is imposed on Lender, and (ii) the sum payable to
the Agent or such Lender shall be increased as may be necessary so that after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) the Agent
or such Lender receives an amount equal to the sum it would have received had no
such deductions or withholdings been made.
(c) Each Borrower agrees to pay any current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or any amendment, supplement or modification of, or
any waiver or consent under or in respect of, the Loan Documents or otherwise
with respect to, the Loan Documents (collectively, the "Other Taxes").
(d) Within 30 days after the request therefor by the Agent or any
Lender in connection with any payment of Indemnified Taxes or Other Taxes, each
Borrower will furnish to the Agent or such Lender the original or certified copy
of an official receipt from the jurisdiction to which payment is made evidencing
payment thereof or, in unavailable, a certificate from its chief financial
officer or president that states that such payment has been made and that sets
forth the date and amount of such payment.
(e) Each Lender agrees to use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its applicable lending office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in is reasonable judgement, be
otherwise disadvantageous to such Lender.
(f) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in this
Section 2.8 shall survive the payment in full of principal and interest
hereunder.
(g) If requested by Borrower, the Agent shall use its best efforts
to provide Borrower with such IRS forms as are reasonably necessary for Borrower
to fulfill its obligations hereunder,
34
but the failure of the Agent to provide such forms shall not in any way relieve
or postpone Borrower's obligations hereunder.
Section 2.10 Computations. All computations of interest on the Loans
and of fees or other charges shall be based on a 360-day year and paid for the
actual number of days elapsed.
Section 2.11 Additional Payments. If any present or future applicable
law, statute, rule or regulation thereunder or any interpretation thereof by any
competent court or by any Governmental Authority charged with the administration
or the interpretation thereof, or any request, directive, instruction or notice
at any time or from time to time hereafter made upon or otherwise issued to the
Agent or any Lender by any central bank or other fiscal, monetary or other
authority (whether or not having the force of law), shall:
(a) subject the Agent or any Lender to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Agreement, the other Loan Documents, any Letters of Credit, the Commitment or
the Loans (other than taxes based upon or measured by the income or profits of
the Agent or such Lender), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to the Agent or any Lender of the
principal of or the interest on any Loans or any other amounts payable to the
Agent or such Lender under this Agreement or any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held by, or
deposits in or for the account of, or loans by, or letters of credit issued by,
or commitments of an office of the Agent or any Lender, or
(d) impose on the Agent or any Lender any other conditions or
requirements with respect to this Agreement, the other Loan Documents, the
Loans, any Letters of Credit, the Commitment or any class of loans, letters of
credit or commitments of which any of the Loans, any Letters of Credit or the
Commitment forms a part, and the result of any of the foregoing is
(i) to increase the cost to the Agent or such Lender of
making, funding, issuing, renewing, extending or maintaining the
Loans, any Letters of Credit or the Commitment; or
(ii) to reduce the amount of principal, interest, or other
amount payable to the Agent or such Lender hereunder on account of the
Loans, any Letters of Credit or the Commitment; or
(iii) to require the Agent or such Lender to make any payment
or to forego any interest or fee or other sum payable hereunder, the
amount of which payment of foregone interest or other sum is
calculated by reference to the gross amount of any sum receivable or
deemed received by the Agent or such Lender from Borrower hereunder,
35
then, and in each such case, Borrower will, upon demand made by the Agent or
such Lender at any time and from time to time and as often as the occasion
therefor may arise, pay to the Agent or such Lender such additional amounts as
will be sufficient to compensate the Agent or such Lender for such additional
cost, reduction, payment, foregone interest or other sum.
Section 2.12 Capital Adequacy. If any present or future law, governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) or the interpretation thereof by a court or governmental authority
with appropriate jurisdiction affects the amount of capital required or expected
to be maintained by the Agent or any Lender or any corporation controlling the
Agent or such Lender and the Agent or such Lender determines that the amount of
capital required to be maintained by it is increased by or based upon the
existence of the Agent or such Lender's commitment with respect to the Loans,
then the Agent or such Lender may notify Borrower of such fact. To the extent
that the costs of such increased capital requirements are not reflected in the
Prime Rate or LIBOR, Borrower and the Agent or such Lender shall thereafter
attempt to negotiate in good faith, within thirty (30) days of the day on which
Borrower receives such notice, an adjustment payable hereunder that will
adequately compensate the Agent or such Lender in light of these circumstances.
If Borrower and the Agent or such Lender are unable to agree to such adjustment
within thirty (30) days of the date on which Borrower receives such notice, then
commencing on the date of such notice (but not earlier than the effective date
of any such increased capital requirement), the amounts payable hereunder shall
increase by an amount that will, in the Agent or such Lender's reasonable
determination, provide adequate compensation. The Agent or such Lender shall
allocate such cost increases among its customers in good faith and on an
equitable basis.
Section 2.13 Certificate; Protection. A certificate setting forth any
additional amounts payable pursuant to Sections 2.11 or 2.12 and a brief
explanation of such amounts which are due, submitted by the Agent to the
Borrower, shall be conclusive, absent manifest error, that such amounts are due
and owing. The protection of Sections 2.11 or 2.12 shall be available to the
Agent and each Lender regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, agreement guideline or other
change or condition which shall have been imposed or shall have occurred.
Section 2.14 Obligations Absolute. The obligations of Borrower under this
Agreement shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and such other agreement or
instrument under all circumstances, and irrespective of, the following
circumstances:
(a) any lack of validity or enforceability of all or any portion of this
Agreement or any other agreement or any instrument relating hereto;
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the obligations of Borrower;
(c) the existence of any claim, setoff, defense or other right that
Borrower may have; or
36
(d) any amendment or waiver of or consent to departure from any of the Loan
Documents, or all or any of the obligations of Borrower in respect of the Loans
or this Agreement.
C. ADDITIONAL CLAUSES FOR LIBOR RATE ADVANCES
Section 2.15 Notice. In the event the Agent determines that by reason of
circumstances affecting the inter-bank Eurodollar market, adequate and
reasonable means do not exist for determining LIBOR or that the eurodollar
deposits in the relevant amount and for the relevant maturity are not available
to the Agent in the inter-bank eurodollar market, with respect to a proposed
LIBOR Rate Advance, the Agent shall give the Borrower prompt notice to such
determination. If such notice is given, then (a) any requested LIBOR Rate
Advance shall be made as a Prime Rate Advance, unless the Borrower gives the
Agent one (1) Business Day's prior written notice that its request for such
borrowing is canceled; (b) any Prime Rate Advance which was to have been
converted to a LIBOR Rate Advance shall be continued as a Prime Rate Advance;
and (c) any outstanding LIBOR Rate Advance shall be converted to a Prime Rate
Advance on the last Business Day of the then current Interest Period for such
LIBOR Rate Advance. Until such notice has been withdrawn, the Agent shall have
no obligation to make LIBOR Rate Advances or maintain outstanding LIBOR Rate
Advances and the Borrower shall not have the right to convert Prime Rate
Advances to LIBOR Rate Advances.
Section 2.16 Invalidity; Enforceability. Notwithstanding any other
provision of this Agreement, if, after the date of this Agreement, any
applicable law, treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any Lender to
make or maintain any LIBOR Rate Advance in dollars or in an Alternative
Currency, the obligation of such Lender hereunder to make or maintain such LIBOR
Rate Advance shall forthwith be suspended for the duration of such illegality
and the Borrower shall, if any such Advance is outstanding promptly, upon
request from such Lender, convert such advance to another Type of Advance. If
any such payment is made on a day that is not the last Business Day of the then
current Interest Period applicable to such Advance, the Borrower shall pay such
Lender, upon such Lender's request, such amount or amounts as may be necessary
to compensate such Lender for any loss or expense sustained or incurred by such
Lender in respect of such advance as a result of any such payment, in accordance
with Section 2.19.
Section 2.16A Currency Equivalents. For purposes of the provisions of this
Article 2, (i) the equivalent in dollars of any Alternative Currency shall be
determined by using the quoted spot rate at which the Agent's Head Office offers
to exchange dollars for such Alternative Currency in London at 11:00 a.m.
(London time) two Business Days prior to the date on which such equivalent is to
be determined, (ii) the equivalent in any Alternative Currency of any other
Alternative Currency shall be determined by using the quoted spot rate at which
the Agent's Head Office offers to exchange such Alternative Currency for the
equivalent in dollars of such other Alternative Currency in London at 11:00 a.m.
(London time) two Business Days prior to the date on which such equivalent is to
be determined, and (iii) the equivalent in any Alternative Currency of dollars
shall be determined by using the quoted spot rate at which the Agent's Head
37
Office offers to exchange such Alternative Currency for dollars in London at
11:00 a.m. (London time) two Business Days prior to the date on which such
equivalent is to be determined."
Section 2.16B. Continuity of Contract. Neither the introduction of the
Euro, nor the substitution of the national currencies of the member states
participating in the European Monetary Union nor the fixing of the official
conversion rate, nor any economic consequences that arise in connection the
European Monetary Union or from any of the aforementioned events shall cause
this Loan Agreement to terminate or give rise to any right to terminate
prematurely, contest, cancel, rescind, modify or otherwise negotiate or alter
this Loan Agreement or any of its provisions, or to raise any other objections
and/or exceptions or to assert any claims for compensation under or in
connection with this Loan Agreement.
Section 2.16C. Euro Amendments. Upon the implementation of a change in any
currency in which the Borrower is permitted to request loans under this Loan
Agreement, this Loan Agreement, including without limitation, the definition of
LIBOR contained herein, will be amended to the extent determined by the Agent,
acting reasonably and in consultation with the Borrower, to be necessary to
reflect the change in currency and to put the Agent, each Lender and the
Borrower in the same position, so far as possible, that they would have been in
if no change in currency had occurred. The Borrower hereby agrees to execute and
deliver to the Agent such amendments to this Loan Agreement as the Lender may
reasonably request in order to carry out the intent of this Section 2.16C.
Section 2.16D. Euro Indemnity. The Borrower agrees, at the request of the
Agent, to compensate the Agent and each Lender for any reasonable loss, cost,
expense or reduction in return that shall be incurred or sustained by the Agent
or any Lender as a result of the implementation of a single currency under the
European Monetary Union, that would not have been incurred or sustained but for
the transactions provided for herein and that, to the extent that such loss,
cost, expense or reduction is of a type generally applicable to extensions of
credit similar to the extensions of credit hereunder, is generally being
requested from borrowers subject to similar provisions. A certificate of any
Lender (x) setting forth the amount or amounts necessary to compensate such
Lender, (y) describing the nature of the loss or expense sustained or incurred
by such Lender as a consequence thereof and (z) setting forth a reasonably
detailed explanation of the calculation thereof shall be delivered to the
Borrower an shall be conclusive absent manifest error. The Borrower shall pay to
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
D. MISCELLANEOUS
Section 2.17 Use of Proceeds. The proceeds of the Revolving Loans made
hereunder shall be used by Borrower for Borrower's short term working capital
requirements. The proceeds of the BV Loans made hereunder shall be used for the
short term working capital requirements of BV and Q.E.P. The proceeds of the
2002 Term Loan will be used to refinance existing term indebtedness of Borrower
to FCC and for general corporate purposes. The proceeds of the 2003 Term Loan
shall be used to refinance the subordinate debt in favor of The HillStreet Fund,
L.P. The proceeds of the Mortgage Loan will be used to refinance existing
mortgage debt of Borrower in favor of a third party lender. Borrower will not,
directly or indirectly, use any part
38
of the proceeds of any of the Loans for the purpose of purchasing or carrying
any margin stock within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System or to extend credit to any Person for the purpose of
purchasing or carrying any such margin stock.
Section 2.18 Termination. The Commitment shall be automatically terminated
on the applicable Maturity Date.
Section 2.19 Indemnification. Borrower agrees to indemnify the Agent and
each Lender and to hold the Agent and each Lender harmless from any loss or
expense which the Agent and each Lender may sustain or incur as a consequence of
(a) default by Borrower in payment when due of the principal amount of, or
interest on, any LIBOR Rate Advance, (b) default by Borrower in making a
borrowing of, conversion into or continuation of LIBOR Rate Advance after
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (c) default by Borrower by making any prepayment
of LIBOR Rate Advances other than in accordance with the provisions of Section
2.1(d) , 2.1A(d), 2.1B(d), 2.2(d), 2.2A(d) or 2.2B(e) hereof, or (d) the making
of a payment, prepayment or conversion of LIBOR Rate Advances on a day which is
not the last Business Day of an Interest Period with respect thereto, including,
without limitation, in each case, any such loss or expense arising from the
reemployment or repayment of funds obtained by the Agent or any Lender or from
fees payable to terminate the deposits from which funds were obtained. The
provisions of this Section shall survive the termination of this Agreement and
the payment of the Loans and all other amounts payable hereunder.
Section 2.20 Cross-Termination. In the event that Borrower pays or prepays
any Revolving Loan in full on or prior to its respective Maturity Date and
terminates the Commitment with respect thereto, Borrower shall (i)
simultaneously prepay all of the Loans in full together with all accrued but
unpaid interest thereon to the date of such prepayment, together with any
applicable Make-Whole Premium and other amounts including, without limitation,
unpaid Reimbursement Obligations, due hereunder or under the Notes, and (ii) if
on the date of such payment any Letter of Credit is outstanding, Borrower shall
pay an amount to the Agent for the ratable benefit of the Lenders equal to the
Available Amount under such Letter of Credit on such date as cash collateral for
such Letter of Credit.
Section 2.21 Change of Lending Office. Each Lender agrees that on the
occurrence of any event giving rise to the operation of Section 2.15 or 2.16
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans or Letters of Credit affected by
such event, provided that such designation is made on such terms that such
Lender and its lending office suffer no economic legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of such Section. Nothing in this Section 2.21 shall affect
or postpone any of the obligations of the Borrower or the right of any Lender
provided in Sections 2.15 or 2.16.
Section 2.22 Replacement of Lenders. (x) If any Lender becomes a Defaulting
Lender or otherwise defaults in its obligations to make Loans, (y) upon the
occurrence of an event giving rise to the operation of Section 2.11, 2.12, 2.15
or 2.16 with respect to any Lender which results
39
in such Lender charging to the Borrower increased costs materially in excess of
those being generally charged by the other Lenders or (z) in the case of a
refusal by a Lender to consent to certain proposed changes, waivers, discharges
or terminations with respect to this Agreement which have been approved by the
Required Lenders as (and to the extent) provided in Section 11.1, the Borrower
shall have the right, if no Default or Event of Default then exists (or, in the
case of preceding clause (z), will exist immediately after giving effect to such
replacement), to replace such Lender (the "Replaced Lender") with one or more
other Eligible Transferees, none of whom shall constitute a Defaulting Lender at
the time of such replacement (collectively, the "Replacement Lender") and each
of whom shall be required to be reasonably acceptable to the Agent, provided
that (i) at the time of any replacement pursuant to this Section 2.22, the
Replacement Lender shall enter into one or more Assignment and Assumption
Agreements pursuant to Section 11.4 (and with all fees payable pursuant to said
Section 11.4 to be paid by the Borrower and/or the Replacement Lender (as may be
agreed to at such time by and between the Borrower and the Replacement Lender))
pursuant to which the Replacement Lender shall acquire all of the Commitments
and outstanding Loans of, and in each case participations in Letters of Credit
by, the Replaced Lender and, in connection therewith, shall pay to (x) the
Replaced Lender in respect thereof an amount equal to the sum of (I) an amount
equal to the principal of, and all accrued interest on, all outstanding Loans of
the Replaced Lender, (II) an amount equal to all Unpaid Reimbursement
Obligations that have been funded by (and not reimbursed to) such Replaced
Lender, together with all then unpaid interest with respect thereto at such
time, and (III) an amount equal to all accrued, but theretofore unpaid, fees
owing to the Replaced Lender, and (y) if the Replaced Lender has a Revolving
Loan Commitment which is being replaced, the Issuing Lender an amount equal to
such Replaced Lender's percentage of any Unpaid Reimbursement Obligations (which
at such time remains an Unpaid Reimbursement Obligation) to the extent such
amount was not theretofore funded by such Replaced Lender to the Issuing Lender
at such time (other than those specifically described in clause (i) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid in full to such Replaced Lender concurrently with
such replacement. Upon the execution of the respective Assignment and Assumption
Agreement, the payment of amounts referred to in clauses (i) and (ii) above and,
if so requested by the Replacement Lender, delivery to the Replacement Lender of
the appropriate Note or Notes executed by the Borrower, the Replacement Lender
shall become a Lender hereunder and, unless the Replaced Lender is being
replaced with respect to less than all of the tranches in which it participates,
the Replaced Lender shall cease to constitute a Lender hereunder, except with
respect to indemnification provisions under this Agreement, which shall survive
as to such Replaced Lender.
E. LETTERS OF CREDIT
Section 2.23 Letters of Credit.
(a) General. Subject to the terms and conditions contained in this
Agreement and in the other Loan Documents, the Borrower may from time to time
while the Commitment remains in effect, request the issuance, amendment, renewal
or extension by the Issuing Lender of one or more Letters of Credit for the
account of Borrower up to an aggregate maximum Available Amount at any time
outstanding of $3,000,000.00. A Letter of Credit shall be issued, amended,
renewed or extended only if, after giving effect to such issuance, amendment,
renewal or
40
extensions, the sum of (1) the aggregate outstanding principal amount of all
Revolving Advances plus (2) the Available Amount, plus (3) any unpaid
Reimbursement Obligations does not exceed the Credit Availability.
(b) Request. In order to request the issuance, amendment, renewal or
extension of a Letter of Credit, Borrower shall deliver to the Issuing Lender,
with a copy to the Agent, a letter of credit application on the Issuing Lender's
then customary form (the "Letter of Credit Application"), completed by Borrower,
the terms of which are hereby incorporated by reference.
(c) Form. Each Letter of Credit shall, among other things, (1) be on the
Issuing Lender's then customary form, (2) provide for the payment of sight
drafts for honor thereunder when presented in accordance with the terms thereof
and when accompanied by the documents described therein, and (3) be subject to,
in the case of Standby Letters of Credit, the International Standby Practices
(ISP98, ICC Publication No. 590) and, in the case of all other Letters of
Credit, the Uniform Customs and Practice for Documentary Credits (ICC
Publication No. 500) and, to the extent not inconsistent therewith, the laws of
the State of Connecticut.
(d) Expiry Dates. Each Letter of Credit shall have an expiry date of the
earlier of the date which is one (1) year after the issuance of such Standby
Letter of Credit and the date that is fourteen (14) Business Days prior to the
Maturity Date, unless such Letter of Credit expires by its terms on an earlier
date.
(e) Reimbursement Obligation. In order to induce the Issuing Lender to
issue, extend or renew the Letters of Credit, Borrower hereby agrees and
promises to reimburse or pay to the Issuing Bank, with respect to each Letter of
Credit issued, extended or renewed hereunder, on each date that any draft or
demand presented or made under such Letter of Credit is honored by the Issuing
Bank, or on which the Issuing Lender otherwise makes a payment with respect
thereto, (i) the amount paid by the Issuing Lender under or with respect to such
Letter of Credit, and (ii) the amount of any taxes, fees, charges or other costs
and expenses whatsoever incurred by the Issuing Lender in connection with any
payment made by the Issuing Lender under, or with respect to, such Letter of
Credit (collectively, the "Reimbursement Obligations"). Unpaid Reimbursement
Obligations shall bear interest at a per annum rate equal to the Default Rate.
(f) Letter of Credit Fees. In the event that the Lender issues, extends or
renews any Letters of Credit for the account of the Borrower (whether
collectively or individually), the Borrower shall pay to the Issuing Lender on
the date of such issuance, extension of renewal and on each anniversary date
thereof, a fee of one and one-half percent (1.5%) per annum on the face amount
of such letter of credit. The Borrower shall also pay the Issuing Lender's usual
and customary administration and negotiation fees with respect to such letter of
credit.
(g) Obligations Unconditional. The obligations of Borrower under Section
2.23(e) and Section 2.23(f) shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with this Agreement, under any and
all circumstances and irrespective of: (1) any lack of validity or
enforceability of any Letter of Credit or any Loan Document, or any term or
provision therein; (2) any amendment or waiver of or any consent to departure
from all or any of the provisions of any Letter of Credit or any Loan Document;
(3) the existence of any
41
dispute, claim, setoff, defense or other right that the Borrower, any other
party guaranteeing, or otherwise obligated with, the Borrower, any Subsidiary or
other Affiliate thereof or any other person may at any time have against the
beneficiary under any Letter of Credit, against the Issuing Lender, the Agent or
any Lender or against any other person whatsoever, whether in connection with
this Agreement, any other Loan Document or any other related or unrelated
agreement or transaction; (4) any draft or other document presented under a
Letter of Credit or any endorsement thereon proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; (5) payment by the Issuing Lender under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit; (6) any error, omission, interruption
or delay in any transmission, dispatch or delivery of any message or advice,
however transmitted, in connection with any Letter of Credit; and (7) any other
act or omission to act or delay of any kind of the Issuing Lender, the Agent, or
any Lender or any other person or any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for the
provisions of this subsection, constitute a legal or equitable discharge of the
Borrower's obligations hereunder.
Borrower agrees that any action taken or omitted by the Issuing Lender, the
Agent or any Lender under or in connection with any Letter of Credit and the
related drafts and documents, if done in good faith, shall be binding upon
Borrower and shall not result in any liability on the part of the Issuing
Lender, the Agent or any Lender to Borrower. It is understood that the Issuing
Lender may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary and, in making any payment under any Letter of
Credit (i) the Issuing Lender's exclusive reliance on the documents presented to
it under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary thereunder equals the
amount of such draft and whether or not any document presented pursuant to such
Letter of Credit proves to be insufficient in any respect, if such document on
its face appears to be in order, and whether or not any other statement or any
other document presented pursuant to such Letter of Credit proves to be forged
or invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever and (ii) any noncompliance in any immaterial respect of the
documents presented under such Letter of Credit with the terms thereof shall, in
each case, be deemed not to constitute willful misconduct, gross negligence or
bad faith of or by the Issuing Lender.
(h) Reliance by the Issuing Lender. The Issuing Lender shall be entitled to
rely and shall be fully protected in relying upon (without responsibility for
further investigation), any Letter of Credit, draft, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document reasonably
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person or persons and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Issuing Lender.
(i) Cash Collateralization. If any Event of Default shall occur and be
continuing, the Borrower shall, on the Business Day it receives notice from the
Agent thereof and of the amount to be deposited, deposit in an account with the
Agent an amount in cash equal to the Available
42
Amount as of such date. Such deposit shall be held by the Agent as collateral
for the payment and performance of all Reimbursement Obligations then arising or
which in the future arise for any and all outstanding Letters of Credit. The
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Such deposits shall not bear interest. Moneys
in such account shall automatically be applied by the Agent from time to time to
any Reimbursement Obligations for which the Issuing Lender has not otherwise
been reimbursed, or, at the Agent's sole discretion, if the maturity of the
Loans has been accelerated, to satisfy any other Obligations. If the Borrower is
required to provide an amount of cash collateral under this subsection as a
result of the occurrence of an Event of Default, such amount shall be returned
to the Borrower within three Business Days after all Events of Default have been
cured or waived.
(j) Notwithstanding anything in this Agreement to the contrary, no
Letters of Credit shall be issued, extended or renewed for the account of BV.
Section 2.24 Letter of Credit Participations.
(a) Immediately upon the issuance by the Issuing Lender of any Letter
of Credit, the Issuing Bank shall be deemed to have sold and transferred to each
Lender, and each such Lender (in its capacity under this Section 2.02, a
"Participant") shall be deemed irrevocably and unconditionally to have purchased
and received from such Issuing Lender, without recourse or warranty, an
undivided interest and participation, to the extent of such Participant's
Revolving Loan Commitment percentage, in such Letter of Credit, each drawing or
payment made thereunder and the obligations of the Borrower under this Agreement
with respect thereto, and any security therefor or guaranty pertaining thereto.
Upon any change in the Revolving Loan Commitments of the Lenders, it is hereby
agreed that, with respect to all outstanding Letters of Credit and Unpaid
Reimbursement Obligations relating thereto, there shall be an automatic
adjustment to the participations pursuant to this Section 2.24 to reflect the
new Revolving Loan Commitment percentages of the assignor and assignee Lender,
as the case may be.
(b) In determining whether to pay under any Letter of Credit, the
Issuing Lender shall not have any obligation relative to the other Lenders other
than to confirm that any documents required to be delivered under such Letter of
Credit appear to have been delivered and that they appear to substantially
comply on their face with the requirements of such Letter of Credit. Any action
taken or omitted to be taken by any Issuing Lender under or in connection with
any Letter of Credit issued by it shall not create for such Issuing Lender any
resulting liability to the Borrower, any Affiliate of the Borrower, any Lender
or any other Person unless such action is taken or omitted to be taken with
gross negligence or willful misconduct on the part of the Issuing Lender (as
determined by a court of competent jurisdiction in a final and non-appealable
decision).
(c) In the event that Issuing Lender makes any payment under any
Letter of Credit issued by it and the Borrower shall not have reimbursed such
amount in full to such Issuing Lender pursuant to Section 2.23, the Issuing
Lender shall promptly notify the Agent, which shall promptly notify each
Participant of such failure, and each Participant shall promptly and
unconditionally pay to such Issuing Lender the amount of such Participant's
Revolving Loan
43
Commitment Percentage of such unreimbursed payment in lawful money of the United
States in immediately available funds. If the Agent so notifies, prior to 12:00
Noon (New York time) on any Business Day, any Participant required to fund a
payment under a Letter of Credit, such Participant shall make available to such
Issuing Lender in lawful money of the United States in immediately available
funds such Participant's Revolving Loan Commitment percentage of the amount of
such payment on such Business Day. If and to the extent such Participant shall
not have so made its Revolving Loan commitment percentage of the amount of such
payment available to such Issuing Lender, such Participant agrees to pay to such
Issuing Lender, forthwith on demand such amount, together with interest thereon,
for each day from such date until the date such amount is paid to such Issuing
Lender at the overnight Federal Funds Rate for the first three (3) days and at
the interest rate applicable to Revolving Loans that are maintained Prime Rate
Advances for each day thereafter. The failure of any Participant to make
available to the Issuing Lender its Revolving Loan Commitment percentage of any
payment under any Letter of Credit shall not relieve any other Participant of
its obligation hereunder to make available to the Issuing Lender its Revolving
Loan Commitment percentage of any payment under any Letter of Credit on the date
required, as specified above, but no Participant shall be responsible for the
failure of any other Participant to make available to the Issuing Lender such
other Participant's Revolving Loan Commitment percentage of any such payment.
(d) Whenever the Issuing Lender receives a payment of a Reimbursement
Obligation as to which it has received any payments from the Participants
pursuant to clause (c) above, the Issuing Lender shall pay to each such
Participant which has paid its Revolving Loan Commitment percentage thereof, in
lawful money of the United States in immediately available funds, an amount
equal to such Participant's share (based upon the proportionate aggregate amount
originally funded by such Participant to the aggregate amount funded by all
Participants) of the principal amount of such reimbursement obligation and
interest thereon accruing after the purchase of the respective participations.
(e) Upon the request of any Participant, the Agent shall furnish to
such Participant copies of any standby Letter of Credit issued by it and such
other documentation as may reasonably be requested by such Participant.
(f) The obligations of the Participants to make payments to the
Issuing Lender with respect to Letters of Credit shall be irrevocable and not be
subject to any qualification or exception whatsoever and shall be made in
accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrowers or any of its Subsidiaries may have at any
time against a beneficiary named in a Letter of Credit, any transferee
of any Letter of Credit (or any Person for whom any such transferee may
be acting), the Agent, any Participant, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated
44
herein or any unrelated transactions (including any underlying
transaction between Borrower or any Subsidiary of Borrower and the
beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents; or
(v) the occurrence of any Default or Event of Default.
Section 2.25 Excess Cash Flow Recapture. So long as there is any
principal amount outstanding under the 2003 Term Note, Borrower shall,
commencing with the fiscal year ending February 29, 2004, pay Lender twenty-five
percent (25%) of the amount of Excess Cash Flow for the such fiscal year
annually upon the sooner to occur of (i) thirty (30) days of the delivery of
Borrower's audited financial statements for such fiscal year and (ii) the end of
the applicable Interest Period. Borrower may elect to make such payment at the
end of the applicable Interest Period notwithstanding that such date may be
greater than thirty (30) days after the delivery of Borrower's audited financial
statements for such fiscal year, provided Borrower maintains a cash reserve with
Lender equal to the amount of such payment. Such payment shall be allocated to
payment of the principal of the 2003 Term Loan, in the inverse order of
maturity.
ARTICLE 3
CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to Effectiveness. The effectiveness
of this Agreement and the obligations of the Lenders to make the Loans shall be
subject to the prior satisfaction of each of the following conditions:
(a) Lender shall have received each of the following, in form and
substance satisfactory to Lender and its counsel:
(1) This Agreement and the Notes, duly executed and delivered
by Borrower;
(2) (i) Copies of the existing UCC-1 Financing Statements
duly filed under the Uniform Commercial Code of all jurisdictions
necessary or, in the opinion of the Lender, desirable to perfect the
security interest created by the Security Agreement; (ii) copies of all
jurisdictions referred to in clause (i) above, including the Financing
Statements filed by the Lender against Borrower, indicating that, no
Person other than the Lender has a Lien on any of the Collateral; and
(iii) copies of all of the UCC-1 financing statements (and, where
applicable, related Form UCC-3s) on file with respect to Borrower, as
of dates acceptable to Lender, in all jurisdictions in which Collateral
is or
45
may be located, indicating that no Person other than the Lender has a
Lien on any of the Collateral, or with respect to any Liens other than
those of Lender, Form UCC-3s in form and substance satisfactory to
Lender, duly executed by the holders of such Liens, terminating all
such Liens;
(3) The Amendment Agreement, duly executed and delivered by
Borrower.
(4) Copies of all corporate action taken by each Borrower,
including resolutions of its Board of Directors, authorizing the
execution, delivery, and performance of the Loan Documents to which it
is a party and each other document to be delivered pursuant to this
Agreement, certified as of the date of this Agreement by the Secretary
of such Borrower;
(5) A certificate, dated as of the date of this Agreement, of
the Secretary of each Borrower certifying the names and true signatures
of the officers of such Borrower authorized to sign the Loan Documents
to which such Borrower is a party and the other documents to be
delivered by such Borrower under this Agreement;
(6) A favorable opinion or opinions of independent counsel
for Borrower, satisfactory to Lender, dated the date of this Agreement;
(7) Such agreements and instruments as the Agent may deem
necessary in connection with the grant by Borrower to the Agent of a
Lien on, and the collateral assignment of, the deposit accounts of
Borrower pursuant to the Security Agreement;
(8) Certificates of insurance and copies of insurance
policies evidencing compliance with the insurance requirements of this
Agreement;
(9) The certificate of incorporation (certified by the
Secretary of the State or equivalent official of such Borrower's
jurisdiction of organization) and bylaws of each Borrower;
(10) A Certificate of Good Standing issued by the Secretary of
the State of its jurisdiction of organization and each state in which
it is qualified to do business evidencing that each Borrower is a
domestic or, as applicable, foreign corporation in good standing in
such jurisdiction;
(11) Due diligence from Borrower in form and substance
satisfactory to the Agent;
(12) A Certificate by Officers of each Borrower or such other
due diligence evidence for each Borrower in form and substance
satisfactory to the Agent;
(13) A Borrowing Base Certificate of Borrower dated the date
of this Agreement;
46
(14) Satisfactory completion of the Agent's customary due
diligence, including but not limited to an independent audit of
Borrower's Eligible Accounts Receivable and Eligible Inventory;
(15) Receipt of the February 28, 2002 year end financial
statements for Borrower;
(16) An amendment fee of $20,000 in immediately available
funds;
(17) All other documents, instruments and agreements that the
Agent shall reasonably require in connection with this Agreement.
(b) All representations and warranties contained in this Agreement
shall be true and correct in all material respects.
Section 3.2 Conditions Precedent to All Advances, Etc.. The
obligation of the Lenders to make each Revolving Advance or BV Advance
(including the initial Revolving Advance or BV Advance) and to issue, extend or
renew any Letter of Credit, shall be at the Agent's discretion and, in addition,
shall be subject to the prior satisfaction of each of the following additional
conditions:
(a) On the Drawdown Date of each Revolving Advance or the date on
which a Letter of Credit is issued, extended or renewed, the following
statements shall be true, and each request by Borrower for a Revolving Advance,
and each Letter of Credit Application shall be deemed to be a representation and
warranty by Borrower that:
(1) The representations and warranties contained in Article 4
of this Agreement and contained in each of the other Loan Documents
containing representations and warranties are correct on and as of the
date of each Revolving Advance or BV Advance or such issuance,
extension or renewal as though made on and as of such date (except
representations and warranties which specifically state a reference
date therein); and
(2) No Default or Event of Default has occurred and is
continuing, or would result from or after giving effect to such
Revolving Advance or BV Advanced or such issuance, extension or
renewal; and
(b) At the time of each Advance or such issuance, extension or
renewal, the sum of (i) in the case of Revolving Advances (1) the aggregate
outstanding principal amount of all Revolving Advances plus (2) the Available
Amount plus (3) all unpaid Reimbursement Obligations and (ii) in the case of BV
Advances, the aggregate outstanding principal amount of all BV Advances, in each
case, does not exceed the Credit Availability.
Section 3.3 Condition Precedent to the 2003 Term Loan. The obligation
of the Lender to make the 2003 Term Loan shall be subject to the prior
satisfaction of each of the following additional conditions:
47
(a) Borrower shall have achieved a minimum proforma Fixed Charge
Coverage Ratio of not less than 1.3:1 (i) for the fiscal year ended February 28,
2003 if the Drawdown Date of the 2003 Term Loan occurs during May 2003, and (ii)
for the twelve (12) months immediately preceding such Drawdown Date if the
Drawdown Date of the 2003 Term Loan occurs between June 1, 2003 and May 31,
2004.
(b) On the Drawdown Date of the 2003 Term Loan, no Default or Event
of Default shall have occurred and be continuing or would occur after giving
effect to such 2003 Term Loan;
(c) The Agent shall have received the 2003 Term Note and a Guaranty
of Xxxxx Xxxxx, each in form and substance satisfactory to the Agent; and
(d) Borrower shall have on such Drawdown Date a Credit Availability
with respect to the Revolving Loan (excluding the BV Loan) of not less than
$750,000.
Section 3.4 Condition Precedent to the Mortgage Loan. The obligation of
the Lender to make the Mortgage Loan shall be subject to the prior satisfaction
of the following additional condition: Borrower shall provide Agent with (i) an
as-built appraisal and results of environmental testing of the Canadian
Property, and (ii) a mortgage and such other documents as are typically provided
in such transactions, in each case satisfactory to the Agent in form and
substance.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
To induce the Agent and each Lender to enter into this Agreement, each
Borrower represents and warrants to the Agent and each Lender that:
Section 4.1 Incorporation, Good Standing, and Due Qualification. Borrower
and each of its Subsidiaries: (a) is a corporation duly organized, validly
existing, and in good standing under the jurisdiction of its organization; (b)
has all power and authority necessary to own its properties and to carry on the
business in which it is now engaged or proposed to be engaged; and (c) is duly
qualified and in good standing as a foreign corporation under the laws of each
other jurisdiction in which such qualification is required except where the
failure to so qualify shall not have a Material Adverse Effect.
Section 4.2 Corporate Power and Authority. The execution and delivery by
Borrower of the Loan Documents and the performance by Borrower of the Loan
Documents, and the borrowings hereunder, are within the powers of Borrower and
have been duly authorized by all necessary corporate and, if required,
shareholder action, and do not and will not (a) violate (i) the certificate of
incorporation or other constitutive documents or bylaws of Borrower or any of
its Subsidiaries, or (ii) any provision of any law, rule, regulation (including,
without limitation,
48
Regulation U of the Board of Governors of the Federal Reserve System), order,
writ, judgment, injunction, decree, determination, or award presently in effect
having applicability to Borrower, or (b) be in conflict with, result in a breach
of or constitute (along or with notice or lapse of time or both) a default under
any indenture or loan or credit agreement or any other agreement, lease, or
instrument to which Borrower is a party or by which Borrower or its properties
may be bound or affected, or (c) result in the creation or imposition of any
Lien upon or with respect to any property or assets now owned or hereafter
acquired by Borrower or any of its Subsidiaries.
Section 4.3 Legally Enforceable Agreement. This Agreement is, and each of
the other Loan Documents when executed and delivered will be, legal, valid, and
binding obligations of Borrower, enforceable against Borrower in accordance with
their respective terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, and other similar laws affecting
creditors' rights generally.
Section 4.4 Financial Statements and Condition; Full Disclosure.
(a) Borrower has submitted to Lender various financial statements and
information, including, without limitation, its annual audited financial
statements for the fiscal year ended February 28, 2002 and its Forms 10-Q for
the fiscal quarters ended May 31, 2002 and August 31, 2002, and Borrower
represents that all of said financial information is true and correct in all
material respects; such financial information fairly presents the financial
condition and the results of operations of Borrower as of the dates thereof and
for the periods indicated therein; that such financial statements disclose all
material liabilities, direct or contingent of the Borrower as of the dates
hereof and the periods indicated; that such financial statements have been
prepared in accordance with generally accepted accounting principles and
practices consistently maintained throughout the periods involved; and that, as
of the date of said financial information submitted, there were no material
unrealized or anticipated losses from any unfavorable commitments of Borrower;
and that there has been no material adverse change in the business, assets,
operations, prospects or condition, financial or otherwise of Borrower from that
set forth in said financial statements.
(b) Borrower is, and on the Drawdown Date of each Revolving Advance and
the date of issuance, extension or renewal of each Letter of Credit will be,
Solvent.
(c) Except as set forth in Schedule 4.4, upon consummation of the
transactions contemplated under the Loan Documents, Borrower will not have any
outstanding Debt other than the obligations and indebtedness under this
Agreement and trade debt incurred in the ordinary course of business.
(d) Neither this Agreement nor any written information, exhibit, report,
document, or certificate furnished to Lender by or on behalf of the Borrower in
connection with this Agreement contained or contains any material misstatement
of fact or omitted or omits to state a material fact or any fact necessary to
make the statements contained herein or therein not misleading. There is no fact
known to Borrower that materially adversely affects or that, insofar as the
Borrower can now reasonably foresee, may materially adversely affect, the
condition,
49
financial or otherwise, operations, properties, or prospects of Borrower or the
ability of Borrower to carry out their obligations under any of the Loan
Documents to which it is or will be a party.
Section 4.5 Other Agreements; No Default. Borrower has no material
contracts, agreements, leases or commitments which have not been previously
disclosed to Lender. Borrower is not in default in any respect in the
performance, observance, or fulfillment of any of the obligations, covenants, or
conditions contained in any contract, agreement, lease or instrument to which
Borrower is a party to the extent that such default would have a Material
Adverse Effect. Borrower enjoys peaceful and undisturbed possession under all
leases to which it is a party.
Section 4.6 Litigation. Except as set forth in Schedule 4.6, there is no
pending or, to Borrower's officers', directors', or key employees' knowledge,
threatened action, suit or proceeding before any court, Governmental Authority,
board of arbitration, or arbitrator against Borrower or for or on behalf of
Borrower or in which Borrower or any of its properties or assets is or may
otherwise become involved which may, in any one case or in the aggregate have a
Material Adverse Effect nor is there any basis therefor. Except as set forth in
Schedule 4.6, Borrower has not received any summons, citation, directive,
letter, or other communication from any Governmental Authority concerning any
intentional or unintentional violation or alleged violation of any Environmental
Laws.
Section 4.7 No Defaults on Outstanding Judgments or Orders. Borrower is
not in default with respect to any judgment, writ, injunction, decree, rule, or
regulation of any Governmental Authority which may, in any one case or in the
aggregate have a Material Adverse Effect.
Section 4.8 Ownership and Liens. Except as set forth on Schedule 4.8,
Borrower has good and marketable title to all of its assets and none of its
assets is subject to any security interest or lien except in favor of Lender.
Section 4.9 Subsidiaries. Borrower has no Subsidiaries other than as set
forth in Schedule 4.9. None of Borrower's non-domestic Subsidiaries (excluding
those set forth in Schedule 4.9) have a net worth of greater than $10,000.00.
Section 4.10 Operation of Business. Borrower possesses all licenses,
permits, franchises, patents, copyrights, trademarks, and trade names, or rights
thereto, to conduct its business substantially as now conducted and as presently
proposed to be conducted, and Borrower is not in violation of any rights of
others with respect to any of the foregoing except where the failure to possess
such licenses or any such violation would not cause a Material Adverse Effect.
Nothing has come to the attention of Borrower's officers, directors or key
employees to the effect that (i) any product, process, method, substance, part
or other material presently contemplated to be sold by or employed by it in
connection with such business may infringe any patent, trademark, service marks,
trade name, copyright, license or other right owned by any other Person or (ii)
there is pending or threatened any claim or litigation against or affecting it
contesting its right to sell or use any such product, process, method,
substance, part or
50
other material where such claim or litigation, if decided adversely to Borrower,
would have a Material Adverse Effect.
Section 4.11 Taxes. Borrower has filed all tax returns (federal, state, and
local) required to be filed and has paid all taxes, assessments, and
governmental charges and levies thereon to be due, including interest and
penalties.
Section 4.12 Debt. Set forth in Schedule 4.4 hereto is a complete and
correct list of all Debt of Borrower. The maximum principal or face amounts of
the obligations set forth, which are outstanding and which can be outstanding,
are correctly stated, and all Liens of any nature given or agreed to be given as
security therefor are correctly described or indicated in such Schedule.
Section 4.13 Capital Stock. All of the outstanding shares of stock of
Borrower and its Subsidiaries have been duly authorized and are validly issued,
fully paid, and non-assessable, are not subject to any right or claim of
rescission, and have been offered, sold and issued by Borrower and its
Subsidiaries in compliance with all applicable federal and state securities laws
and are owned as more particularly set forth in Schedule 4.13, in each case free
and clear of all liens, pledges, charges or other encumbrances except in favor
of the Agent.
Section 4.14 Margin Securities. None of the advances of any Loans will be
used, directly or indirectly, for the purpose of purchasing or carrying any
margin security, as that term is defined in Regulations G and U of the Board of
Governors of the Federal Reserve system (the "Federal Reserve Board"), or for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security, or for any other purpose
which might cause any of such advances and other financial accommodations under
this Agreement to be considered a "purpose credit" within the meaning of
Regulation G, T, U, or X of the Federal Reserve Board. None of Borrower's assets
and none of the Collateral constitute margin securities. Borrower will neither
take, nor permit any agent acting on its behalf to take, any action which might
cause any transaction or obligation, or right created by this Agreement, or any
document or instrument delivered pursuant hereto, to violate any regulation of
the Federal Reserve Board.
Section 4.15 Fiscal Year. The fiscal year of Borrower for financial
accounting purposes ends on February 28 of each calendar year.
Section 4.16 No Broker's Fees, et Borrower is not obligated to pay any
brokerage commissions, finder's fees, appraisal fees, or investment banking fees
in connection with the transactions contemplated by this Agreement.
Section 4.17 Governmental Consents and Regulatory Approvals. Borrower has
obtained all consents, licenses, and other approvals from all governmental
authorities required in connection with the execution, delivery, and performance
by Borrower of the Loan Documents and the transactions contemplated thereby.
51
Section 4.18 Eligible Accounts Receivable. Each Receivable that Borrower
represents or warrants the Agent to be an Eligible Account Receivable in each
Borrowing Base Certificate or other certification delivered by Borrower to the
Agent pursuant to this Agreement will be, as of the date so certified, an
Eligible Account Receivable unless the Agent shall in its sole discretion
determine such Receivable to be ineligible.
Section 4.19 Eligible Inventory. All Inventory that Borrower represents or
warrants to the Agent to be Eligible Inventory in each Borrowing Base
Certificate or other certification delivered by Borrower to the Agent pursuant
to this Agreement will be, as of the date so certified, Eligible Inventory
unless the Agent shall in its sole discretion determine such Inventory to be
ineligible.
Section 4.20 Environmental Compliance. Except as set forth in (i) a certain
Environmental Site Assessment Update, Xxxxxxx Consolidated Industries, 0000 Xxxx
Xxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000 dated September, 1997; (ii) a certain
Environmental Site Assessment Update, Xxxxxxx Consolidated Industries, 000 Xxxxx
Xxxxxxx Xxxx Xxxxxxxxx, Xxxx xx Xxxxxxxx, Xxxxxxxxxx 00000 dated September,
1997; (iii) a certain Environmental Compliance Review, Xxxxxxx Consolidated
Industries, 0000 Xxxx Xxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000 dated September, 1997;
(iv) a certain Environmental Compliance Review, Xxxxxxx Company Canada Limited,
0000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx dated September, 1997; and (v) a certain
Environmental Site Assessment Update, Xxxxxxx Company Canada Limited, 0000
Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx dated September, 1997, and (ii) Schedule 4.20:
(a) the Property and the current and anticipated use thereof materially
comply with all Environmental Laws and all other laws, ordinances or regulations
pertaining to the use and operation of such premises;
(b) to the best of Borrower's knowledge, no Release of any Contaminants
has occurred or is now occurring upon the Property; and
(c) neither Borrower nor the Property has been, are now or are threatened
to be the subject of any Enforcement Action.
Section 4.21 Compliance with Laws. Borrower is not in violation of any
laws, ordinances, rules or regulations applicable to it, of all federal, state
or municipal governmental authorities, instrumentalities or agencies including,
without limitation, ERISA, the United States Occupational Safety and Health Act
of 1970, as amended, all federal, state, county and municipal laws, ordinances,
rules and regulations relating to the environment, as such may be amended, where
such violation would have a Material Adverse Effect.
Section 4.22 Events of Default. No Default or Event of Default has occurred
and is continuing.
Section 4.23 Labor Disputes and Acts of God. The business and properties of
Borrower have not been affected by any fire, explosion, accident, strike,
lockout, or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or of the public enemy, or other
52
casualty (whether or not covered by insurance) which may, in any one case or in
the aggregate have a Material Adverse Effect.
Section 4.24 ERISA. Borrower is in compliance in all material respects with
all applicable provisions of ERISA. Neither a Reportable Event nor a Prohibited
Transaction has occurred and is continuing with respect to any Plan; no notice
of intent to terminate a Plan has been filed, nor has any plan been terminated;
no circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administrate, a Plan, nor has the PBGC instituted any such proceedings;
neither Borrower nor any ERISA Affiliate has completely or partially withdrawn
under Sections 4201 or 4204 of ERISA from a Multiemployer Plan; Borrower and
each ERISA Affiliate have met their minimum funding requirements under ERISA
with respect to all of its Plans and the present fair market value of all Plan
assets exceeds the present value of all vested benefits under each Plan, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA and the regulations thereunder for calculating the
potential liability of Borrower or any ERISA Affiliate to the PBGC or the Plan
under Title IV of ERISA; and neither Borrower, nor any ERISA Affiliate has
incurred any liability to the PBGC under ERISA.
ARTICLE 5
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that until the Commitment is irrevocably
terminated and payment is made in full of the Loans and all of its other
obligations hereunder are fully performed, Borrower shall, and shall cause its
Subsidiaries to:
Section 5.1 Maintenance of Existence. Subject to Section 5.16, preserve
and maintain its existence in its current form of organization and good standing
in the jurisdiction of its organization, and qualify and remain qualified as a
foreign corporation in each jurisdiction in which such qualification is required
except where the failure to so qualify shall not have a Material Adverse Effect
and except that a Subsidiary may merge or consolidate with any other Subsidiary
or with its parent company provided the surviving entity of such merger or
consolidation is obligated as a Borrower under this Agreement and the Loan
Documents, as applicable.
Section 5.2 Maintenance of Records. Keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all of its financial transactions.
Section 5.3 Maintenance of Properties. Maintain, keep, and preserve all of
its properties necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear excepted except where the
failure to so keep and preserve shall not have a Material Adverse Effect.
53
Section 5.4 Conduct of Business. Continue to engage in a business of the
same general type as conducted and proposed to be conducted by it on the date of
this Agreement.
Section 5.5 Maintenance of Insurance.
(a) Keep its properties, including without limitation its Inventory, and
the Property insured against fire, theft and other hazards (so-called "All Risk"
coverage) in amounts and with companies satisfactory to the Agent to the same
extent in covering such risks as is customary in the same or a similar business,
but in no event in an amount less than the lesser of (i) the total indebtedness
or (ii) the amount necessary to avoid any co-insurance penalty, which policy
shall name the Agent as loss payee as its interest may appear, (b) maintain
public liability coverage against claims for personal injuries, death or
property damage in an amount deemed reasonable by the Agent, which policy shall
name the Agent as an additional insured, and (c) maintain all worker's
compensation, employment or similar insurance as may be required by applicable
law. Such All Risk property insurance coverage shall provide for a minimum of
thirty (30) days' written cancellation notice to the Agent. Borrower agrees to
deliver copies of all of the aforesaid insurance policies to the Agent. In the
event of any loss or damage to the Collateral, Borrower shall give prompt
written notice to the Agent and to its insurers of such loss or damage and shall
properly file its proofs of loss with said insurers.
Section 5.6 Compliance With Laws. Comply in all material respects with all
applicable laws, rules, regulations, and orders of Governmental Authorities,
such compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments, and governmental charges imposed upon it or
upon its property, provided that Borrower may contest any such compliance in
good faith upon making adequate reserves in accordance with GAAP for the
consequences of any noncompliance.
Section 5.7 Right of Inspection. At any reasonable time and from time to
time, permit the Agent and each Lender or any agent or representative of Lender
to examine and make copies of and abstracts from the records, including without
limitation computer records, and books of account of, and visit the properties
of, Borrower and to discuss the affairs, finances, and accounts of Borrower with
any of its or their officers and directors and its independent accountants (who,
by this reference, are authorized by Borrower to discuss such matters with the
Agent and each Lender or any agent or representative of the Agent and each
Lender).
Section 5.8 Reporting Requirements. Furnish or cause to be furnished to
the Agent and each Lender:
(a) As soon as available and in any event within one hundred and five
(105) days after the end of each fiscal year, a consolidated and consolidating
balance sheet of Borrower and its consolidated subsidiaries as of the end of
such year and the related statements of income, operations, retained earnings
and cash flows with accompanying footnotes of Borrower and its consolidated
subsidiaries for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
accompanied by an unqualified audited report thereon by an independent certified
public accountant of national standing acceptable to Lender, which shall state
that such financial statement presents fairly the financial
54
condition as at the end of such fiscal year, and the combined results of
operations and changes in financial position for such fiscal year, of Borrower
and its consolidated subsidiaries in accordance with GAAP.
(b) Within thirty (30) days after the end of each month, consolidated and
consolidating financial statements of Borrower and its consolidated subsidiaries
for the period in question and the fiscal year to date and comparing the results
of such period and fiscal year to the comparable periods of the immediately
preceding fiscal year, prepared and certified as being true, complete and
correct by the chief financial officer of Borrower.
(c) Within forty-five (45) days after the end of each fiscal quarter and
each fiscal year, a financial covenant compliance certificate in form and
substance satisfactory to Lender, sufficient to verify Borrower's compliance
with the financial covenants contained in Section 7 of this Agreement, prepared
and certified as being true, complete and correct by the chief financial officer
of Borrower.
(d) On each Drawdown Date or date of issuance, extension or renewal of a
Letter of Credit, a collateral update certificate on Lender's then current form
and, on a bi-weekly basis as of the 15/th/ and last day of each month, a
Borrowing Base Certificate in the Agent's current form (a "Borrowing Base
Certificate"), with supporting verification.
(e) On a monthly basis, within thirty (30) days following the end of each
month, (i) a detailed aging of Receivables for each of the Domestic Companies
and for BV, and (ii) a detailed accounts payable aging, each in form and
substance satisfactory to Lender.
(f) Promptly upon receipt thereof, and in any event simultaneously with
the delivery of the financial statements required by subparagraph 5.8(a) hereof,
copies of any reports and management letters submitted to Borrower by
independent certified public accountants in connection with the examination of
financial statements.
(g) Within (i) five (5) days subsequent to filing with the Internal
Revenue Service and applicable state taxing authorities, copies of federal and
state income tax returns of Borrower, and (ii) five (5) days subsequent to
filing with the SEC, copies of all Forms 8-K, 10-K and 10-Q filed with the SEC.
(h) Promptly after the commencement thereof, notice of all actions, suits,
and proceedings before any Governmental Authority affecting Borrower, which, if
determined adversely to Borrower, could have a Material Adverse Effect, and such
additional information regarding such actions, suits, and proceedings as Lender
may request from time to time.
(i) Immediately upon the occurrence of each Default or Event of Default, a
written notice setting forth the details of such Default or Event of Default and
the action which is being taken or proposed to be taken by Borrower with respect
thereto.
(j) Upon request of the Agent, copies of all reports (including annual
reports) and notices which Borrower files with or receives from the PBGC or the
U.S. Department of Labor
55
under ERISA; and as soon as possible but not later than ten (10) days after
Borrower knows or has reason to know that any Reportable Event or Prohibited
Transaction has occurred with respect to any Plan or that the PBGC or Borrower
has instituted or will institute proceedings under Title IV of ERISA to
terminate any Plan, Borrower will deliver to the Agent and each Lender a
certificate of the chief financial officer of Borrower setting forth details as
to such Reportable Event or Prohibited Transaction or Plan termination and the
action Borrower proposes to take with respect thereto.
(k) Promptly after the furnishing thereof, copies of any material
statement or report furnished to any other party pursuant to the terms of any
indenture, loan, credit, or similar agreement and not otherwise required to be
furnished to the Agent and each Lender pursuant to any other clause of this
Section.
(l) Not more than thirty (30) days following the end of each fiscal year,
financial projections for the next fiscal year, including consolidated balance
sheets, income statements, sources and uses of funds and other supporting
schedules.
(m) Such other information respecting the condition or operations,
financial or otherwise, of Borrower as the Agent may from time to time
reasonably request.
The reports described above shall be in form and detail as shall be satisfactory
to the Agent and shall be certified by Borrower's chief financial officer as
being true, complete and correct.
Section 5.9 Eligible Accounts Receivable; Eligible Inventory. Promptly
after receiving notice or otherwise becoming aware thereof, notify the Agent in
writing that (i) a Receivable that Borrower has represented or warranted to the
Agent to be an Eligible Account Receivable has ceased to be an Eligible Account
Receivable for any reason other than payment thereof in the ordinary course of
business or (ii) any Inventory that Borrower has represented or warranted to the
Agent to be Eligible Inventory has ceased to be Eligible Inventory for any
reason.
Section 5.10 Collateral. (a) Preserve the Collateral in good condition and
order and not permit it to be abused or misused, (b) not allow any of the
Collateral to be affixed to real estate unless such real estate is subject to a
Lien in favor of the Agent , (c) upon request of Lender, prepare to deliver all
proceeds of the Collateral to the Agent immediately upon receipt in the
identical form received without commingling with other property, (d) if an Event
of Default has occurred and is continuing, if required by the Agent , notify
Account Debtors and obligors that their accounts, instruments, documents,
contracts and all of Borrower's rights to receive payments have been assigned to
the Agent and shall be paid directly to the Agent , (e) take necessary steps to
preserve the liability of Account Debtors, obligors, and secondary parties whose
liabilities are part of the Collateral, (f) take any action required by the
Agent with reference to the Federal Assignment of Claims Act, (g) allow the
Agent to inspect the Collateral and to inspect and copy all records relating to
the Collateral, (h) upon the occurrence and continuance of an Event of Default,
immediately upon request by the Agent: (A) transfer possession or permit the
Agent to take possession of all Collateral; and (B) assign and/or allow the
Agent to immediately take possession of all instruments, and documents which are
part of the
56
Collateral, or as to those hereafter acquired, immediately following
acquisition, and (i) notify the Agent of any change of location or material
adverse change in the condition of any of the Collateral, or of any material
adverse change in any fact or circumstance warranted or represented by Borrower
herein or furnished to the Agent, or if any Event of Default occurs.
Section 5.11 Defend Collateral. Defend the Collateral against all claims
and demands of all persons at any time claiming the same or any interest therein
and, in the event Lender's security interest in the Collateral, or any part
thereof, would be impaired by an adverse decision, allow the Agent to contest or
defend any such claim or demand in Borrower's name and pay, upon demand, the
Agent 's reasonable costs, charges and expenses, including, without limitation
reasonable attorneys' fees in connection therewith.
Section 5.12 Environmental Covenants. Provide at the expense of Borrower a
Phase I environmental site assessment of the Property if an Event of Default
shall have occurred and be continuing or the Agent shall have reasonable cause
to believe that an actual or threatened violation of an Environmental Law has
occurred, is occurring or is about to occur, in each case prepared by an
independent environmental consulting or engineering firm acceptable to the Agent
in its sole discretion and in each case stating conclusions satisfactory to the
Agent in its sole discretion, together with such additional environmental
studies, audits, site assessments or remedial or corrective actions as shall be
reasonably required by the Agent or recommended by any such Phase I site
assessment. Should Borrower fail to commence any such environmental site
assessment, study, audit or remedial or corrective action within thirty (30)
days of the Agent 's written request, the Agent shall have the right but not the
obligation to retain an environmental consultant to perform the same, at
Borrower's expense, and all costs and expenses incurred by the Agent in
connection therewith shall be payable by Borrower upon demand.
Section 5.13 Operating Accounts. Maintain at all times all of its operating
accounts, including without limitation its checking accounts, with the Agent or
a banking subsidiary of Fleet Financial Group.
Section 5.14 Permitted Acquisitions.
(a) Subject to the provisions of this Section 5.14 and the requirements
contained in the definition of Permitted Acquisition, the Borrower and any of
its Subsidiaries may from time to time during the term of this Agreement, effect
Permitted Acquisitions, so long as (in each case except to the extent the
Required Lenders otherwise specifically agree in writing in the case of a
specific Permitted Acquisition): (i) no Default or Event of Default shall be in
existence at the time of the consummation of the proposed Permitted Acquisition
or immediately after giving effect thereto; (ii) the Borrower shall have given
the Agent and the Lenders at least ten (10) Business Days' prior written notice
of any Permitted Acquisition; (iii the Borrower shall have provided the Agent
with calculations evidencing (x) a proforma Fixed Charge Coverage Ratio (based
on trailing 12 month Earnings Before Interest, Taxes, Depreciation and
Amortization) of not less than 1.5:1 and (y) average Credit Availability for the
immediately preceding 90 days of not less than $2,500,000 (iv) all
representations and warranties contained herein and in the other Loan Documents
shall be true and correct in all material respects with the same effect as
though such representations and warranties had been made on and as of the date
of such Permitted
57
Acquisition (both before and after giving effect thereto), unless stated to
relate to a specific earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such earlier
date; (v) the Borrower shall have delivered to the Agent an officer's
certificate executed by a senior officer of the Borrower, certifying to the best
of his knowledge, that the proposed Permitted Acquisition could not reasonably
be expected to result in materially increased tax, ERISA, or any of its
Subsidiaries (except such liabilities in amounts reasonable in relation to the
size of the Permitted Acquisition and which are not likely, individually or in
the aggregate, to (x) cause a subsequent breach of any covenants (financial or
otherwise) contained herein or (y) give rise to a Material Adverse Effect), (vi)
the Borrower provides to the Agent and the Lenders as soon as available but not
later than five (5) Business Days after the execution thereof, a copy of any
executed purchase agreement or similar agreement with respect to such Permitted
Acquisition; (vii) the Borrower shall have delivered to the Agent an officer's
certificate executed by the Chairman or Chief Financial Officer of the Borrower,
certifying, to the best of his knowledge, compliance with the requirements of
preceding clauses (i) through (viii) and containing the calculations (A)
required by the preceding clause (iii), (ix) the aggregate consideration
(including, without limitation, cash, assumed debt, Permitted Acquired Debt,
capitalized lease obligations and the principal amount of all issued promissory
notes including, without limitation, seller notes) payable in connection with
proposed Permitted Acquisitions does not exceed $2,000,000 in any fiscal year of
Borrower (excluding any cash of the target company and any contingent payouts in
connection with such Permitted Acquisition, provided the contingent payout is
subject to a subordination agreement satisfactory in form and substance to
Lender) and (y) the aggregate consideration paid in connection with the proposed
Permitted Acquisition, when combined with the aggregate consideration paid in
connection with all other Permitted Acquisitions consummated pursuant to this
proviso, does not exceed $3,000,000 (excluding any cash of the target company
and any contingent payouts in connection with such Permitted Acquisition,
provided the contingent payout is subject to a subordination agreement
satisfactory in form and substance to Lender); (x) if any portion of the Debt
incurred in connection with such Permitted Acquisition consists of seller notes,
the Agent shall have reviewed and approved, prior to the closing of such
Permitted Acquisition, the payment terms, structure, and security (if any) for
such seller notes and such seller notes shall have been subordinated to the
Obligations on terms and conditions and pursuant to subordination agreements
satisfactory to the Agent.
(b) At the time of each Permitted Acquisition involving the creation or
acquisition of a Subsidiary, or the acquisition of capital stock or other equity
interests of any Person, the capital stock or other Equity Interests thereof
created or acquired in connection with such Permitted Acquisition shall be
pledged for the benefit of the Lenders pursuant to the pledge agreement in form
and substance satisfactory to the Agent, provided that in the event the
Subsidiary is a foreign corporation, any such pledge will be limited to no more
than 66-2/3% of the capital stock of such Subsidiary.
(c) The Borrower shall cause each Subsidiary which is formed to effect, or
is acquired pursuant to, a Permitted Acquisition to comply with, and to execute
and deliver, all of the documentation required by the Agent.
58
(d) The consummation of each Permitted Acquisition shall be deemed to be a
representation and warranty by the Borrower that the certifications by the
Borrower (or by one or more of its officers) pursuant to Section 5.14(a) are
true and correct and that all conditions thereto have been satisfied and that
same is permitted in accordance with the terms of this Agreement, which
representation and warranty shall be deemed to be a representation and warranty
for all purposes hereunder.
(e) Any assets acquired pursuant to a Permitted Acquisition which Borrower
proposes to include within the Borrowing Base shall, prior to such inclusion,
have been audited by the Agent's field examination unit and approved by such
unit for inclusion in the Borrowing Base
Section 5.15 Minimum Availability.. Maintain, at all times, during the
period from the Drawdown Date of the 2003 Term Loan through and including, the
first anniversary of such Drawdown Date, a Credit Availability with respect to
the Revolving Loan (excluding the BV Loan) of not less than $750,000.
ARTICLE 6
NEGATIVE COVENANTS
Borrower covenants and agrees that, without the prior written consent of
the Agent, until the Commitment is irrevocably terminated and payment is made in
full of the Loans and all its obligations hereunder are fully performed,
Borrower shall not, and shall cause its Subsidiaries not to:
Section 6.1 Liens. Create, incur, assume, or suffer to exist any Lien upon
or with respect to any of its properties, now owned or hereafter acquired,
except:
(a) Liens in favor of the Agent;
(b) Liens for taxes or assessments or other government charges or levies
not yet due and payable or, if due and payable, Liens for taxes being contested
in good faith by appropriate proceedings and for which appropriate reserves in
accordance with GAAP are maintained;
(c) Liens imposed by law, such as mechanics, materialmen's, landlords',
warehousemen's, and carriers' Liens, and other similar Liens, securing
obligations incurred in the ordinary course of business which do not exceed in
the aggregate $50,000.00 and which are not past due for more than thirty (30)
days, unless such Liens are being contested in good faith by appropriate
proceedings and appropriate cash reserves have been established therefor; and
(d) Liens securing Debt permitted under Section 6.2(d) hereof; and
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(e) Personal property leases and similar liens and purchase money liens
securing the cost of acquisition of assets subject to such liens or security
interests not to exceed an aggregate dollar amount of $750,000 during the
initial term of the Revolving Loan..
Section 6.2 Debt. Create, incur, assume, or suffer to exist any recourse
or nonrecourse Debt, except:
(a) Debt of the Borrower under this Agreement;
(b) Debt (if any) described in Schedule 4.4, but no renewals, extensions,
or refinancings thereof;
(c) Accounts payable to trade creditors for goods or services and current
operating liabilities (other than for borrowed money), in each case incurred in
the ordinary course of business and paid within the required time, unless
contested by the Borrower in good faith and by appropriate proceedings;
(d) Indebtedness of any Subsidiary of Borrower acquired pursuant to a
Permitted Acquisition (or Indebtedness assumed by the Borrower or any Subsidiary
of Borrower pursuant to a Permitted Acquisition as a result of a merger or
consolidation or the acquisition of an asset securing such Indebtedness) (the
"Permitted Acquired Debt"), so long as (i) such Indebtedness was not incurred in
connection with, or in anticipation or contemplation of, such Permitted
Acquisition, (ii) such Indebtedness does not constitute debt for borrowed money
(except to the extent such Indebtedness cannot be repaid in accordance with its
terms at the time of its assumption pursuant to such Permitted Acquisition, it
being understood and agreed that capitalized lease obligations shall not
constitute debt for borrowed money for purposes of this clause (ii) and (iii) at
the time of such Permitted Acquisition, such Indebtedness does not exceed 25% of
the total value of the assets of the Subsidiary so acquired, or of the assets so
acquired, as the case may be;
(e) Interest rate protection agreements required or permitted under this
Agreement; and
(f) Unsecured Debt in an amount not to exceed an aggregate dollar amount
of $500,000 during the initial term of the Revolving Loan, such Debt to be on
terms and conditions satisfactory to the Agent.
Section 6.3 Mergers, Etc Merge or consolidate with, or sell, assign,
lease, or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to any Person, or acquire all or substantially all of the
assets or the business of any Person, except that a Subsidiary may merge or
consolidate with any other Subsidiary or with its parent company provided the
surviving entity of such merger or consolidation is obligated as a Borrower
under this Agreement and the Loan Documents, as applicable.
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Section 6.4 Leases. Create, incur, assume, or suffer to exist any
obligation as lessee for the rental or hire of any real or personal property,
except (a) leases existing on the date of this Agreement as set forth in
Schedule 6.4 and any extensions or renewals thereof and (b) operating leases in
an aggregate amount not to exceed $500,000.00 at any time.
Section 6.5 Sale and Leaseback. Sell, transfer, or otherwise dispose of
any real or personal property to any Person and thereafter directly or
indirectly lease back the same or similar property.
Section 6.6 Restricted Payments. Except as set forth on Schedule 6.6, pay,
make or declare any Restricted Payment, except (i) payments to The HillStreet
Fund, L.P. expressly permitted by the Intercreditor Agreement, and (ii) unless
an Event of Default shall have occurred and be continuing, or would occur after
giving effect to any such payment, payments to Xxxxx Xxxxx in connection with
the repurchase of shares of the Borrower's common stock which she holds, as
approved by Borrower's Board of Directors in May 1998.
Section 6.7 Sale of Assets. Sell, lease, assign, transfer, or otherwise
dispose of any of its now owned or hereafter acquired assets except: (a) for
Inventory disposed of in the ordinary course of business; and (b) the sale or
other disposition of assets no longer used or useful in the conduct of its
business.
Section 6.8 Investments. Make any loan or advance to any Person, or
purchase or otherwise acquire any capital stock, assets, obligations, or other
securities of, make any capital contribution to, or otherwise invest in or
acquire any interest in any Person except: (a) direct obligations of the United
States or any agency thereof with maturities of one year or less from the date
of acquisition; (b) commercial paper of a domestic issuer rated at least "A-1"
by Standard & Poor's Corporation or "P-1" by Xxxxx'x Investors Service, Inc.;
(c) certificates of deposit with maturities of one year or less from the date of
acquisition issued by Lender; (d) for stock, obligations, or securities received
in settlement of debts (created in the ordinary course of business) owing to
Borrower; (e) investments in money market funds of which substantially all the
assets are comprised of securities of the types described in clauses (a) through
(c) above; (f) fully collateralized repurchase agreements with a term of not
more than twelve months for securities described in clause (a) above and entered
into with any federally insured lender or primary dealers in U.S. Government
securities; and (g) investments in Subsidiaries which are or thereupon become
obligated as Borrowers under this Agreement and the other Loan Documents, as
applicable, or satisfy the requirements of Section 6.11(b) hereof.
Section 6.9 Guaranties, Etc Except as set forth in Schedule 6.9, assume,
guaranty, endorse, or otherwise be or become directly or contingently
responsible or liable (including, but not limited to, an agreement to purchase
any obligation, stock, assets, goods, or services, or to supply or advance any
funds, assets, goods, or services, or to maintain or cause such Person to
maintain a minimum working capital or net worth, or otherwise to assure the
creditors of any Person against loss) for obligations of any Person in an
aggregate amount not to exceed $500,000.00, except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business.
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Section 6.10 Transactions With Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate, except 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 would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.
Section 6.11 Subsidiaries. (a) Create or otherwise acquire an interest in
any Subsidiary or permit any non-domestic Subsidiary (excluding such
Subsidiaries listed on Schedule 6.11) to have a net worth of greater than
$50,000 and (b) permit either of Q.E.P - O'Tool, Inc., a California corporation
or Westpoint Foundry, Inc. to own assets with a book value of greater than
$1,000.00 at any time.
Section 6.12 Fiscal Year. Change its fiscal year.
Section 6.13 Accounting Methods. Make or consent to a material change (a)
in the stock ownership or structure of Borrower or in the manner in which
business of the Borrower is conducted or (b) in its method of accounting unless
such change is within the permissible standards of GAAP.
Section 6.14 Inventory Locations. Move Inventory to or otherwise maintain
Inventory at a location with respect to which Borrower has not delivered to the
Agent (i) a lessor's consent and agreement from the lessor thereof (ii) a
subordination, nondisturbance and attornment agreement from each mortgagee
thereof and (iii) such other documents or instruments as the Agent shall deem
necessary in its sole discretion in order to create or maintain a first priority
perfected security interest in such Inventory in favor of the Agent , in each
case in form and substance satisfactory to the Agent in its sole discretion.
ARTICLE 7
FINANCIAL COVENANTS
Borrower covenants and agrees that until payment is made of all the Loans
and the performance of all its obligations hereunder, Borrower shall (as to
Borrower and any of its Subsidiaries) on a consolidated basis:
Section 7.1 Current Ratio. Maintain a ratio of (i) Current Assets to (ii)
Current Liabilities of not less than 1.0:1.0 as of the end of each fiscal
quarter of the Borrower.
Section 7.2 Tangible Net Worth. Maintain as of the end of each fiscal
quarter of the Borrower a Tangible Net Worth of not less than (i) prior to the
Drawdown Date of the 2003 Term Loan, $14,750,000, (ii) at the end of the first
fiscal quarter following the Drawdown Date of the 2003 Term Loan and at each
fiscal quarter thereafter through and including the fiscal quarter ending August
31, 2003, $13,000,000, (iii) if the Drawdown Date of the 2003 Term Loan has
occurred prior thereto, at the end of the fiscal quarters ending November 30,
2003 and February 29, 2004, $14,000,000 and (iv) for each fiscal quarter
thereafter, the amount equal to
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the sum of (x), the amount required during the last fiscal quarter of the
immediately preceding fiscal year (e.g. for the fiscal quarter ending May 31,
2004, August 31, 2004, November 30, 2004 and February 28, 2005, the amount
required for the fiscal quarter ended February 29, 2004) plus (y) the percentage
of Borrower's net income for the immediately preceding fiscal year set forth in
the following table:
Fiscal Quarter Ending Required Percentage of net income
--------------------- ---------------------------------
(each year)
May 31 12.5%
August 31 25%
November 30 37.5%
February 28/29 50%
Section 7.3 Leverage Ratio. Maintain as of the end of each quarter of the
Borrower, a ratio of (i) Total Liabilities minus Subordinated Debt to (ii)
Tangible Capital Base of not more than (a) prior to the Drawdown Date of the
2003 Term Loan, 2.75:1.0 and (b) thereafter as set forth in the following table:
Fiscal Quarter Ending Ratio Not More Than
5/31/03 - 2/29/04 3.25:1.0
5/31/04 - 2/28/05 2.75:1.0
5/31/05 - 2/28/06 2.50:1.0
Section 7.4 Senior Debt to Trailing EBITDA Ratio. The Borrower shall
maintain on a rolling four quarter basis as of the end of each fiscal quarter of
the Borrower a ratio of (i) Senior Debt to (ii) trailing twelve-month Earnings
Before Interest, Taxes, Depreciation and Amortization of not more than (a) prior
to the Drawdown Date of the 2003 Term Loan, 3.0:1.0 and (b) thereafter as set
forth in the following table:
Fiscal Quarter Ending Ratio Not More Than
5/31/03 - 2/29/04 3.0:1.0
5/31/04 2/28/05 2.75:1.0
5/31/05 - 2/28/06 2.65:1.0
Section 7.5 Interest Coverage Ratio. The Borrower shall maintain a ratio
of (i) Earnings Before Interest and Taxes to (ii) Interest Expense of not less
than 1.5:1.0 as of the end
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of each fiscal quarter of the Borrower. The covenant shall only remain in effect
until the Drawdown Date of the 2003 Term Loan.
Section 7.6 Debt Service Coverage Ratio. The Borrower shall maintain on a
rolling four quarter basis as of the end of each fiscal quarter of the Borrower
a ratio of (i) Earnings Before Interest, Taxes, Depreciation and Amortization
minus unfinanced Capital Expenditures to (ii) Current Maturities of Long Term
Debt plus Interest Expense of not less than 1.25:1.0. The covenant shall only
remain in effect until the Drawdown Date of the 2003 Term Loan.
Section 7.7 Fixed Charge Coverage Ratio. The Borrower shall maintain on a
rolling four quarter basis as of the end of each fiscal quarter of the Borrower
a ratio of (i) Earnings Before Interest, Taxes, Depreciation and Amortization
minus unfinanced Capital Expenditures minus all taxes paid during such period
minus, at all times following the Drawdown Date of the 2003 Term Loan, all
dividends paid during such period, to (ii) Current Maturities of Long-Term Debt
plus Interest Expense of not less than (a) prior to the Drawdown Date of the
2003 Term Loan, 1.1:1.0 and (b) thereafter as set forth in the following table:
Fiscal Quarter Ending Ratio Not Less Than
5/31/03 - 2/29/04 1.1:1.0
5/31/04 - 2/28/06 1.15:1.0
Section 7.8 Certain Financial Terms. For purposes of this Article 7, the
following terms shall have the following meanings:
(a) "Capital Assets" means fixed assets, both tangible (such as land,
buildings, fixtures, machinery and equipment) and intangible (such as patents,
copyrights, trademarks, franchises and good will); provided that capital assets
shall not include any item customarily charged directly to expense or
depreciated over a useful life of twelve (12) months or less in accordance with
GAAP.
(b) "Capital Expenditures" means amounts paid or indebtedness incurred by
Borrower or any of its Subsidiaries in connection with the purchase or lease by
the Borrower or any of its Subsidiaries of Capital Assets that would be required
to be capitalized and shown on the balance sheet of such Person in accordance
with GAAP.
(c) "Current Assets" means the aggregate amount of assets which in
accordance with GAAP may be properly classified as current assets, after
deducting all costs and estimated earnings in excess of amounts billed and all
indebtedness from Affiliates.
(d) "Current Liabilities" means (i) all Debt due on demand or within one
year from the date of determination thereof (including without limitation all
Debt owed to Lender) and (ii) all other items which, in accordance with GAAP,
may be properly classified as current liabilities.
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(e) "Current Maturities of Long-Term Debt" means, with respect to all Debt
which, in accordance with GAAP, may be properly classified as long-term debt,
the portion of such Debt which is due within one (1) year from the date of
determination thereof.
(f) "Earnings Before Interest and Taxes" means earnings (or losses) from
operations for any period, after all expenses and other proper charges but
before payment or provision for any income taxes or interest expense for such
period.
(g) "Earnings Before Interest, Taxes, Depreciation and Amortization" means
earnings (or losses) from operations for any period, after all expenses and
other proper charges but before payment or provision for any depreciation,
amortization, income taxes and increased by interest expense (including non-cash
interest expense) and pension expense and option or warrant related expenses for
such period.
(h) "Interest Expense" means, for any period, the aggregate amount of
interest required to be paid or accrued during such period on all Debt
outstanding during all or any part of such period, whether such interest was or
is required to be reflected as an item of expense or capitalized, including
payments consisting of interest in respect of Capital Leases and including
commitment fees, agency fees, facility fees, balance deficiency fees and similar
fees or expenses in connection with the borrowing of money.
(i) "Senior Debt" means Debt of the Borrower to the Agent or any Lender of
any kind or nature.
(j) "Subordinated Debt" means any Debt of the Borrower which is
subordinated in right of payment to the Loans upon terms and conditions and
pursuant to subordination agreements satisfactory to the Lender in its sole
discretion.
(k) "Tangible Capital Base" means Tangible Net Worth plus Subordinated
Debt.
(l) "Tangible Net Worth" means as at any date of determination thereof,
(a) the amount at which common stockholders' equity and preferred stock would be
shown on a balance sheet at such date, minus (b) amounts at which good will and
any other intangibles and amounts owed by and/or invested in Affiliates would be
shown on such balance sheet, plus (c) Subordinated Debt. During the period prior
to the Drawdown Date of the 2003 Term Loan, Tangible Net Worth shall not include
the $1,239,000 of one-time charges (net of taxes) previously incurred by
Borrower. At all times following the Drawdown Date of the 2003 Term Loan,
Tangible Net Worth shall not include (i) non-cash items related to the
extinguishment of the Subordinated Debt owed to The HillStreet Fund, L.P., and
(ii) accumulated other comprehensive loss as set forth in the equity section of
Borrower's balance sheet.
(m) "Total Liabilities" means all Debt and other liabilities which in
accordance with GAAP may be properly classified as liabilities and all other
liabilities, indebtedness or obligation whether or not so classified.
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Section 7.9 Exclusion from Calculations. All calculations made pursuant to
Article 7 shall exclude any adjustments required by GAAP as a result of the
mandatory put provisions contained in the Warrant Agreement between the Borrower
and The HillStreet Fund, L.P.
ARTICLE 8
SECURITY
The Loans are secured by and pursuant to the Security Documents.
ARTICLE 9
EVENTS OF DEFAULT
Section 9.1 Events of Default.
(a) Any one or more of the following events (whether voluntary or
involuntary or effected by operation of law or otherwise) shall be an Event of
Default:
(1) Borrower shall fail to pay the principal of, premium, if any, or
interest on the Notes, or any amount of any fee, or any other liability or
indebtedness owing by Borrower to the Agent or any Lender within three (3)
days of the due date thereof;
(2) Any representation or warranty made or deemed made by Borrower in
any of the Loan Documents, or which is contained in any certificate,
document, opinion, report, or financial or other statement furnished at any
time under or in connection with any Loan Document, shall have been
incorrect in any material respect on or as of the date made or deemed made;
(3) Borrower shall fail to comply with any of the covenants contained
in Articles 5, 6 and 7 provided however the Borrower shall have a ten (10)
day grace period to comply with the reporting requirements contained in
Section 5.8;
(4) Borrower shall fail to perform or observe any term, covenant or
agreement contained herein or in any of the other Loan Documents (other
than those specified elsewhere in this Section 9.1) for thirty (30) days
after written notice of such failure shall have been given to Borrower by
the Agent;
(5) Borrower shall (A) fail to pay any indebtedness for borrowed
money in excess of $250,000 (other than the Notes), including any interest
or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise), (B) fail to perform or
observe any term, covenant, or condition on its part to be performed or
observed under any agreement or instrument relating to any such
indebtedness, when required to be performed or observed (including any
applicable grace
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periods), if the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration after the giving of notice or
passage of time, or both, of the maturity of such indebtedness, whether or
not such failure to perform or observe shall be waived by the holder of
such indebtedness; or 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, or (C) be in
default under any other indebtedness of Borrower to the Agent or any
Lender;
(6) Borrower (A) shall generally not, or shall be unable to, or shall
admit in writing its inability to pay its debts as such debts become due;
or (B) shall make an assignment for the benefit of creditors, petition or
apply to any tribunal for the appointment of a custodian, receiver, or
trustee for it or a substantial part of its assets; or (C) shall commence
any proceeding under any bankruptcy, reorganization, arrangements,
readjustment of debt, dissolution, or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (D) shall have any
such petition or application filed or any such proceeding commenced against
it in which an order for relief is entered or adjudication or appointment
is made and which remains undismissed for a period of sixty (60) days or
more; or (E) by any act or omission shall indicate its consent to, approval
of, or acquiescence in any such petition, application, or proceeding, or
order for relief, or the appointment of a custodian, receiver, or trustee
for all or any substantial part of its properties; or (F) shall suffer any
such custodianship, receivership, or trusteeship to continue undischarged
for a period of sixty (60) days or more;
(7) One or more judgments, decrees, or orders for the payment of
money which in the aggregate exceeds $250,000.00 shall be rendered against
Borrower and such judgments, decrees, or orders shall continue unsatisfied
and in effect for a period of thirty (30) consecutive days without being
vacated, discharged, satisfied, or stayed or bonded pending appeal;
(8) Any Security Document shall at any time after its execution and
delivery and for any reason other than an act or omission by the Agent
cease to create a valid and perfected first priority security interest (or
such lesser priority security interest as may be specifically set forth
therein) in and to the property purported to be subject to such Security
Document or otherwise to be in full force and effect, or any Security
Document shall be declared null and void, or the validity or enforceability
thereof shall be contested by Borrower, or Borrower shall deny it has any
further liability or obligation under any Security Document, or Borrower
shall fail to perform any of its obligations under any Security Document
subject to any notice and cure provisions contained in any Security
Document;
(9) Any event shall occur or exist with respect to Borrower which
could in the opinion of the Agent subject Borrower to any tax, penalty, or
other liability under or in connection with ERISA in excess of $250,000;
(10) There shall occur any material uninsured damage to or loss,
theft, or destruction of any of the Collateral;
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(11) Borrower ceases to conduct its business as currently
conducted or is enjoined, restrained or in any way prevented by court
order from conducting all or any material part of its business affairs;
(12) There shall occur any material adverse change in the condition
(financial or otherwise), operations, properties or business of (a) QEP,
Xxxxxxx Consolidated Industries, Inc. or (b) Borrower, any Affiliate, and
any Subsidiary taken as a whole;
(13) The occurrence of any of the following: (i) the sale or other
transfer of all or substantially all of the assets of the Borrower, (ii)
any transaction (including a merger or consolidation) the result of which
is that any "person" or "group" (within the meaning of Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) becomes the "beneficial owner" (within the meaning of Rule 13d-3
under the Exchange Act) of more than thirty-five percent (35%) (calculated
on a fully diluted basis) of the voting power of all classes of voting
stock of the Borrower and/or warrants or options to acquire such voting
stock, (iii) the adoption of a plan relating to the liquidation or
dissolution of the Borrower, or (iv) the first day on which a majority of
the members of the Board of Directors of the Borrower cease to be
Continuing Directors (meaning the directors of the Borrower on the date
hereof and each other director, if such director's nomination for election
to the Board of Directors of the Borrower is recommended by a majority of
the Continuing Directors at the time of such nomination or election); or
(14) Any other failure of Borrower to perform under this Agreement
subject to applicable notice and cure periods; or
(b) Upon and after the occurrence of an Event of Default, the Agent may,
and upon the request of the Required Lenders, shall (1) declare the Commitment
to be terminated, whereupon the same shall forthwith terminate and/or (2)
declare all the outstanding indebtedness evidenced by the Notes and all other
amounts payable under this Agreement (including, without limitation, any
Make-Whole Premium or termination fee that Borrower would have been obligated to
pay had it then elected to prepay the Notes and terminate the Commitment), to be
forthwith due and payable, whereupon the Commitment shall be terminated and the
Notes, all such interest, and all such other amounts shall become and be
forthwith due and payable, without presentment, demand, protest, or further
notice of any kind, all of which are hereby expressly waived by Borrower;
provided, however, that upon the occurrence of any event described in Section
9.1(a)(6), the Commitment shall terminate and the outstanding Notes, all
interest thereon, and all such other amounts payable under this Agreement shall
become automatically due and payable, without presentment, demand, protest, or
further notice of any kind, all of which are hereby expressly waived by
Borrower.
(c) The occurrence of an Event of Default under any or all of the
documents evidencing, securing or relating to the Loans shall be an Event of
Default under this Agreement.
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ARTICLE 10
THE AGENT
Section 10.1 Appointment. Each of the Lenders and the Issuing Lenders
hereby designates FCC as Agent to act as specified herein and in the other Loan
Documents, including without limitation as collateral agent for the benefit of
the Lenders with regard to all collateral securing the Loans. Each Lender and
the Issuing Lender hereby irrevocably authorizes the Agent to take such action
on its behalf under the provisions of this Agreement, the other Loan Documents
and any other instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. the Agent
may perform any of its duties hereunder by or through its respective officers,
directors, agents, employees or affiliates.
Section 10.2 Nature of Duties. the Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and in the
other Loan Documents. Neither the Agent, nor any of its officers, directors,
agents, employees or affiliates shall be liable for any action taken or omitted
by it or them hereunder or under any other Loan Document or in connection
herewith or therewith, unless caused by its or their gross negligence or willful
misconduct (as determined in a final and non-appealable decision by a court of
competent jurisdiction). The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement
or any other Loan Document a fiduciary relationship in respect of any Lender;
and nothing in this Agreement or any other Loan Document, expressed or implied,
is intended to or shall be so construed as to impose upon the Agent any
obligations in respect of this Agreement or any other Loan Document except as
expressly set forth herein or therein.
Section 10.3 Lack of Reliance on the Agent. Independently and without
reliance upon the Agent, each Lender and the Issuing Lender, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of Borrower and each of its
Subsidiaries in connection with the making and the continuance of the Loans and
the taking or not taking of any action in connection herewith and (ii) its own
appraisal of the creditworthiness of Borrower and each of its Subsidiaries and,
except as expressly provided in this Agreement, the Agent shall not have any
duty or responsibility, either initially or on a continuing basis, to provide
any Lender or the Issuing Lender with any credit or other information with
respect thereto, whether coming into its possession before the making of the
Loans or at any time or times thereafter. The Agent shall not be responsible to
any Lender or the Issuing Lender for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectability, priority or
sufficiency of this Agreement or any other Loan Document (or with respect to the
validity, priority or perfection of any security interests purported to be
created thereunder) or the financial condition of the Borrower or any of its
Subsidiaries or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of
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this Agreement or any other Loan Document, or the financial condition of
Borrower or any of its Subsidiaries or the existence or possible existence of
any Default or Event of Default.
Section 10.4 Certain Rights of the Agent. If the Agent shall request
instructions from the Required Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other Loan
Document, the Agent shall be entitled to refrain from such act or taking such
action unless and until the Agent shall have received instructions from the
Required Lenders; and the Agent shall incur no liability to any Person by reason
of so refraining. Without limiting the foregoing, no Lender shall have any right
of action whatsoever against the Agent as a result of such Agent acting or
refraining from acting hereunder or under any other Loan Document in accordance
with the instructions of the Required Lenders.
Section 10.5 Reliance. The Agent shall be entitled to rely, and shall be
fully protected in relying upon, any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that the Agent believed to be the proper Person, and, with respect to
all legal matters pertaining to this Agreement and any other Loan Document and
its duties hereunder and thereunder, upon advice of counsel selected by the
Agent.
Section 10.6 Indemnification. To the extent that the Agent is not
reimbursed and indemnified by the Borrower, the Lenders will reimburse and
indemnify the Agent, in proportion to their respective aggregate Commitments
(determined as if there were no Defaulting Lenders and, if all Loans have been
repaid in full, as determined immediately before giving effect to such
repayment) for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, costs, expenses or disbursements
of whatsoever kind or nature which may be imposed on, asserted against or
incurred by the Agent in performing its duties hereunder or under any other Loan
Document, or in any way relating to or arising out of this Agreement or any
other Loan Document; provided that to the extent that the Agent is reimbursed by
the Borrower for amounts paid by the Lenders pursuant to this Section 10.6, the
Agent shall reimburse the Lenders for such amounts; provided further, that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct (as determined
in a final and non-appealable decision by a court of competent jurisdiction).
Section 10.7 The Agent in its Individual Capacity. With respect to its
obligation to make Loans, or issue or participate in Letters of Credit, under
this Agreement, the Agent shall have the rights and powers specified herein for
a "Lender" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Lenders," "Required
Lenders," or any similar terms shall, unless the context clearly otherwise
indicates, include the Agent in its individual capacity. The Agent may accept
deposits from, lend money to, and generally engage in any kind of banking,
investment banking, trust or other business with, or provide debt financing,
equity capital or other services (including financial advisory services) to, the
Borrower or any Affiliate of the Borrower (or any Person engaged in a similar
business with the Borrower or any Affiliate thereof) as if they were not
performing the duties specified herein, and may accept fees and other
consideration from the Borrower or any Affiliate
70
of the Borrower for services in connection with this Agreement and otherwise
without having to account for the same to the Lenders.
Section 10.8 Resignation.
(a) The Agent may resign from the performance of all its functions and
duties hereunder and/or under the other Loan Documents at any time by giving 15
Business Days' prior written notice to the Lenders and the Borrower (provided
that no such notice shall be required to be given to the Borrower if a Default
or Event of Default of the type described in Section 9.1(a)(6) exists with
respect to the Borrower). Any such resignation by the Agent hereunder shall also
constitute its resignation as an Issuing Lender, in which case the resigning
Agent (x) shall not be required to issue any further Letters of Credit hereunder
and (y) shall maintain all of its rights as Issuing Lender with respect to any
Letters of Credit issued by it prior to the date of such resignation. Such
resignation shall take effect upon the appointment of a successor Agent pursuant
to clauses (b) and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation by the Agent, the Required Lenders
shall appoint a successor Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the Borrower (it being
understood and agreed that (i) the Borrower's acceptance of a successor Agent
pursuant to this paragraph (b) shall not be unreasonably withheld, (ii) so long
as a Default or Event of Default exists at such time such successor Agent shall
not be required to be reasonably satisfactory to the Borrower and (iii) any
Lender is deemed to be acceptable to the Borrower).
(c) If a successor Agent shall not have been so appointed within such 15
Business Day period, the Agent, with the consent of the Borrower (which consent
shall not be unreasonably withheld or delayed but shall not be required at any
time when a Default or Event of Default exists and is continuing), shall then
appoint a successor Agent who shall serve as Agent hereunder or thereunder until
such time, if any, as the Required Lenders appoint a successor Agent as provided
above.
(d) If no successor Agent has been appointed pursuant to clause (b) or (c)
above by the 30th Business Day after the date such notice of resignation was
given by the Agent, the Agent's resignation shall become effective and the
Required Lenders shall thereafter perform all the duties of the Agent hereunder
and/or under any other Loan Document until such time, if any, as the Required
Lenders appoint a successor Agent as provided above.
(e) Upon a resignation of the Agent pursuant to this Section 10.8, the
Agent shall remain indemnified to the extent provided in this Agreement and the
other Loan Documents and the provisions of this Article 10 shall continue in
effect for the benefit of the Agent for all of its actions and inactions while
serving as Agent.
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ARTICLE 11
GENERAL PROVISIONS
Section 11.1 Amendments, Etc
(a) Neither this Agreement nor any other Loan Document nor any terms
hereof or thereof may be changed, waived, discharged or terminated unless such
change, waiver, discharge or termination is in writing signed by the Borrower
and Agent, provided, that no such change, waiver, discharge or termination
shall, without the consent of the Required Lenders (other than a Defaulting
Lender) (with Obligations being directly modified in the case of following
clause (i)), (i) extend the final scheduled maturity of any Loan or Note or
extend the stated expiration date of any Letter of Credit beyond the Maturity
Date, or reduce the rate or extend the time of payment of interest or fees
thereon (except in connection with the waiver of applicability of any
post-default increase in interest rates), or reduce the principal amount thereof
(it being understood that any amendment or modification to the financial
definitions in this Agreement shall not constitute a reduction in the rate of
interest or Fees for the purposes of this clause (i)), (ii) release all or
substantially all of the Collateral (except as expressly provided in the Loan
Documents) under the Security Documents, (iii) amend, modify or waive any
provision of this Section 11.1 (except for technical amendments with respect to
additional extensions of credit pursuant to this Agreement which afford the
protections to such additional extensions of credit of the type provided to the
Term Loans the Mortgage Loan and the Revolving Loan Commitments on the date of
this Agreement), (iv) change the definition of Required Lenders or (v) consent
to the assignment or transfer by either the Borrower, or its Subsidiaries, of
any of its rights and obligations under this Agreement; provided, further, that
no such change, waiver, discharge or termination shall (1) increase the
Commitments of any Lender over the amount thereof then in effect without the
consent of such Lender (it being understood that waivers or modifications of
conditions precedent, covenants, Defaults or Events of Default or of a mandatory
reduction in the Commitment shall not constitute an increase of the Commitment
of any Lender, and that an increase in the available portion of any Commitment
of any Lender shall not constitute an increase of the Commitment of such
Lender), (2) without the consent of the Issuing Lender, amend, modify or waive
any provision of Section 2.23 or 2.24 or alter its rights or obligations with
respect to Letters of Credit, and (3) without the consent of the Agent, amend,
modify or waive any provision of Article 10 or any other provision as same
relates to the rights or obligations of the Agent.
(b) If, in connection with any proposed change, waiver, discharge or
termination of any of the provisions of this Agreement as contemplated by
clauses (i) through (v), inclusive, of the first proviso to Section 11.1 (a) the
consent of the Required Lenders is obtained but the consent of one or more of
such other Lenders whose consent is required is not obtained, then the Borrower
shall have the right, so long as all non-consenting Lenders whose individual
consent is required are treated as described in either clauses (A) or (B) below,
to either (A) replace each such non-consenting Lender or Lenders with one or
more Replacement Lenders so long as at the time of such replacement, each such
Replacement Lender consents to the proposed change, waiver, discharge or
termination or (B) terminate such non-consenting Lender's Commitments and/or
repay outstanding Loans of such Lender, provided that, unless the Commitments
that are
72
terminated, and Loans repaid, pursuant to preceding clause (B) are immediately
replaced in full at such time through the addition of new Lenders or the
increase of the Commitments and/or outstanding Loans of existing Lenders (who in
each case must specifically consent thereto), then in the case of any action
pursuant to preceding clause (B) the Required Lenders (determined after giving
effect to the proposed action) shall specifically consent thereto, provided
further, that in any event the Borrower shall not have the right to replace a
Lender, terminate its Commitments or repay its Loans solely as a result of the
exercise of such Lender's rights (and the withholding of any required consent by
such Lender) pursuant to the second proviso to Section 11.1(a).
Section 11.2 Notices, Etc All notices, demands, requests, and other
communications given under this Agreement shall only be effective if they are
(i) in writing, (ii) actually received by the addressee, and (iii) sent by hand
delivery, by facsimile transmission, by reputable express delivery service, or
by first-class mail, postage prepaid:
(a) If to the Agent, to it at:
Fleet Capital Corporation
Xxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Vice President
Telephone No.: 203/000-0000
Telecopier No.: 203/964-9038
And to it at:
000 Xxxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Loan Administrator; QEP Account Officer
Telecopier No.: 860/368-6029
With a copy to:
Xxxxxxx & Xxxxxxx LLP
Xxx Xxxxxxxx Xxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Telephone No.: 860/000-0000
Telecopier No.: 860/251-5999
(b) If to a Lender, to its address as set forth in Schedule 2
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(c) If to Borrower, to it at:
Q.E.P. Co., Inc.
0000 Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx, CFO
Telephone No.: 561/000-0000
Telecopier No.: 561/994-1530
With a copy to:
Holland & Knight LLP
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telephone No.: 305/000-0000
Telecopier No.: 305/789-7799
or to such other address (and/or facsimile transmission number) as Borrower or
the Agent, or such Lender, as the case may be, shall have specified in a notice
sent to the other in accordance with this Section.
Section 11.3 No Waiver; Remedies. No failure on the part of the Agent or
any Lender to exercise, and no delay in exercising, any right, power, or remedy
under any of the Loan Documents shall operate as a waiver of such right, power,
or remedy, nor shall any single or partial exercise of any right, power, or
remedy under any of the Loan Documents preclude any other or further exercise
thereof or the exercise of any other right, power, or remedy. The remedies
provided in the Loan Documents are cumulative and not exclusive of any remedies
provided by law.
Section 11.4 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of
Borrower, the Agent and each Lender and their respective successors and assigns;
provided, however, that Borrower shall not (by agreement, operation of law, or
otherwise) assign any of their respective rights, or delegate any of their
respective obligations, under any of the Loan Documents to which Borrower is a
party without the prior written consent of the Agent , and any such assignment
or delegation made without such consent shall be null and void. Each Lender may
sell participations in, or may, subject to Section 11.4 (b) hereof, assign, all
or any part of any of the Loans to another lender, in which event (a) in the
case of an assignment, the assignee shall have, to the extent of such assignment
(unless otherwise provided therein), the same rights, benefits and obligations
as it would have if it were a Lender hereunder; and (b) in the case of a
participation, the participant shall have no rights under the Loan Documents.
The agreement executed by such Lender in favor of the participant shall not give
the participant the right to require such Lender to take or omit to take any
action hereunder except action directly relating to (i) the extension of a
payment date with respect to any portion of the principal of or interest on
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any amount outstanding hereunder allocated to such participant, (ii) the
reduction of the principal amount outstanding hereunder or (iii) the reduction
of the rate of interest payable on such amount or any amount of fees payable
hereunder to a rate or amount or any amount of fees payable hereunder to a rate
or amount, as the case may be, below that which the participant is entitled to
receive under its agreement with such Lender. A Lender may furnish any
information concerning Borrower in the possession of such Lender from time to
time to assignees and participants (including prospective assignees and
participants); provided that such Lender shall, if requested by Borrower,
require any such prospective assignee or such participant (prospective or
otherwise) to agree in writing to maintain the confidentiality of such
information, except as required by applicable laws or regulatory or governmental
authorities. Any Lender may at any time pledge all or any portion of its rights
under the Loan Documents including any portion of the Notes to any of the twelve
(12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act,
12 U.S.C. Section 341. No such pledge or enforcement thereof shall release such
Lender from its obligations under any of the Loan Documents.
(b) Notwithstanding the foregoing, any Lender (or any Lender together
with one or more other Lenders) may (x) assign all or a portion of its
Commitments and related outstanding Obligations (or, if the Commitments have
terminated, its outstanding Obligations) hereunder to (i)(A) its parent company
and/or any Affiliate of such Lender which is at least 50% owned by such Lender
or its parent company or (B) one or more other Lenders or (ii) in the case of
any Lender that is a fund that invests in bank loans, any other fund that
invests in bank loans and is managed by the same investment advisor of any
Lender or by an Affiliate of such investment advisor or (y) assign all, or if
less than all, a portion equal to at least $1,000,000 in the aggregate for the
assigning Lender or assigning Lenders of such Commitments and related
outstanding Obligations hereunder (or, if the Commitments have terminated, its
outstanding Obligations) to an Eligible Transferee (treating any fund that
invests in bank loans and any other fund that invests in bank loans and is
managed or advised by the same investment advisor of such fund or by an
Affiliate of such investment advisor as a single Eligible Transferee), each of
which assignees shall become a party to this Agreement as a Lender by execution
of an Assignment and Assumption Agreement (it being understood that any
assignment pursuant to clause (y) above by any Lender described in preceding
clause (x)(ii) must meet the $1,000,000 minimum described above unless the
respective assignment is of all the Commitments and related outstanding
Obligations held by such Lender and any other fund that invests in bank loans
and is managed by the same investment advisor of any Lender or by an Affiliate
of such investment advisor), provided that (i) at such time, Schedule 2 shall be
deemed modified to reflect the Commitments and/or outstanding Loans, as the case
may be, of such new Lender and of the existing Lenders, (ii) upon the surrender
of the relevant Notes (if any) by the assigning Lender (or, upon such assigning
Lender's indemnifying the Borrower for any lost Note pursuant to a customary
indemnification agreement) new Notes will be issued, at the Borrower's expense,
to such new Lender and to the assigning Lender upon the request of such new
Lender or assigning Lender, such new Notes to be in conformity with the
requirements of this Agreement (with appropriate modifications) to the extent
needed to reflect the revised Commitments and/or outstanding Loans, as the case
may be, (iii) the consent of the Agent shall be required in connection with any
such assignment pursuant to clause (y) above or any such assignment of Revolving
Loan Commitments pursuant to clause (x) above (which consents shall not be
unreasonably withheld or delayed), (iv) the consent of the Issuing Lender shall
be required in connection with any such
75
assignment of Revolving Loan Commitments (which consents shall not be
unreasonably withheld or delayed), (v) the Agent shall receive at the time of
each such assignment, from the assigning or assignee Lender, the payment of a
non-refundable assignment fee of $3,500, and (vi) no such transfer or assignment
will be effective until recorded by the Agent on the Register pursuant to
Section 11.25. To the extent of any assignment pursuant to this Section 11.4(b),
the assigning Lender shall be relieved of its obligations hereunder with respect
to its assigned Commitments and outstanding Loans. At the time of each
assignment pursuant to this Section 11.4(b) to a Person which is not already a
Lender hereunder and which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for Federal income tax purposes, the
respective assignee Lender shall, to the extent legally entitled to do so,
provide to the Borrower the appropriate Internal Revenue Service Forms. To the
extent that an assignment of all or any portion of a Lender's Commitments and
related outstanding Obligations would, at the time of such assignment, result in
increased costs under from those being charged by the respective assigning
Lender prior to such assignment, then the Borrower shall not be obligated to pay
such increased costs (although the Borrower, in accordance with and pursuant to
the other provisions of this Agreement, shall be obligated to pay any other
increased costs of the type described above resulting from changes after the
date of the respective assignment).
Section 11.5 Costs, Expenses, and Taxes; Indemnification.
(a) Borrower agrees to pay on demand all reasonable costs and expenses
in connection with the preparation, execution, delivery, filing, recording, and
administration of any of the Loan Documents, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Agent with respect
thereto and with respect to advising the Agent as to its rights and
responsibilities under any of the Loan Documents including without limitation,
ongoing advice following the effectiveness of this Agreement and all costs and
expenses, if any, in connection with the protection, collection and/or other
enforcement of this Agreement or any of the Loan Documents. In addition,
Borrower shall pay any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing, and
recording of any of the Loan Documents and the other documents to be delivered
under any of the Loan Documents, and agrees to hold and save the Agent and each
Lender harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or failure to pay such taxes and fees.
(b) To the fullest extent permitted by applicable law, if a Default or
an Event of Default shall have occurred and be continuing, Borrower agrees to
defend, indemnify and hold harmless the Agent, each Lender, any other holder of
the Notes and each of the present and future shareholders, partners, directors,
officers, employees, agents, counsel and successors and assigns of each of them
(collectively with the Agent and each Lender the "Lender Parties") from and
against any and all loss, cost, expense, claim, liability (including strict
liability) or asserted liability incurred from or out of the Loans, the
execution, delivery or performance of this Agreement, or any of the documents or
instruments to be executed and delivered hereunder, or otherwise arising out of
the debtor/creditor relationship between them, the Agent and each Lender or the
Lender Parties relating to the Loans, the exercise of any of the Agent and each
Lender's rights under the Loans, any litigation or proceeding instituted or
conducted by any Governmental Authority, any act or omission of Borrower or
otherwise, except to the extent (and
76
only to the extent) that the same arises from the gross negligence or willful
misconduct of the Agent or any Lender.
(c) Without limiting the generality of the preceding subparagraph (b),
Borrower agrees to defend, protect, indemnify and hold harmless the Lender
Parties from and against, and to reimburse the Lender Parties on demand with
respect to, any and all matters of any and every kind or character, known or
unknown, fixed or contingent, asserted against or incurred by Lender Parties at
any time and from time to time by reason of or arising out of any violation of
any Environmental Laws, the presence, disposal, escape, seepage, leakage,
spillage, discharge, emission, release or threatened release of any Contaminant
or any action, suit, proceeding or investigation brought or threatened with
respect to any Contaminant (including, but not limited to, claims with respect
to wrongful death, personal injury or damage to property), in each case,
including, without limitation, the reasonable fees and disbursements of counsel
and allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding.
(d) The obligations of Borrower described in this Section 11.5 shall
survive the closing of the transactions described in this Agreement, including
the making of any and all Loans and the payment and satisfaction of the Notes.
Section 11.6 Right of Setoff. The Agent and each Lender is hereby
authorized at any time and from time to time without notice to Borrower (any
such notice being expressly waived by the Borrower), to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by the Agent or such
Lender to or for the credit or the account of Borrower against any and all of
the obligations of Borrower now or hereafter existing under this Agreement or
the Notes or any of the other Loan Documents, irrespective of whether or not
Lender shall have made any demand under this Agreement or the Notes or such
other Loan Document and although such obligations may be unmatured. The Agent or
such Lender agrees promptly to notify Borrower after any such setoff and
application, provided that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of the Agent and each Lender
under this Section 11.6 are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which the Agent or such Lender may
have. ANY AND ALL RIGHTS TO REQUIRE THE AGENT OR ANY LENDER TO EXERCISE ITS
RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOANS,
PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS
OR OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.
Section 11.7 Governing Law; Jurisdiction.
(a) This Agreement, the Notes and the other Loan Documents shall be
construed in accordance with and governed by the laws of the State of
Connecticut without regard to its conflict of laws rules.
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(b) Borrower hereby irrevocably submits to the jurisdiction of any
Connecticut State or United States Federal court sitting in Connecticut over any
action or proceeding arising out of or relating to this Agreement, the Notes or
the other Loan Documents, and Borrower hereby irrevocably agrees that all claims
in respect to such action or proceeding may be heard and determined in such
Connecticut State or Federal court. Borrower irrevocably consents to the service
of any and all process in any such action or proceeding by the mailing of copies
of such process to Borrower at its address specified in Section 11.2. Borrower
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Borrower further waives any objection to
venue in such state and any objection to an action or proceeding in such State
on the basis of forum non conveniens. Borrower further agrees that any action or
proceeding brought against the Agent or any Lender shall be brought only in
Connecticut State or United States Federal courts sitting in Connecticut.
(c) Nothing in this Section 11.7 shall affect the right of the Agent or any
Lender to serve legal process in any other manner permitted by law or affect the
right of the Agent or any Lender to bring any action or proceeding against
Borrower or their property in the courts of any other jurisdiction.
(d) To the extent that Borrower has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether from service
or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to themselves or their property, such
Person hereby irrevocably waives such immunity in respect of its obligations
under this Agreement, the Notes and the other Loan Documents.
(e) BORROWER ACKNOWLEDGES AND AGREES THAT THE TRANSACTION OF WHICH THIS
AGREEMENT IS A PART IS A COMMERCIAL TRANSACTION AND NOT A CONSUMER TRANSACTION
AND WAIVE ANY RIGHT TO A NOTICE AND HEARING UNDER CHAPTER 903a OF THE
CONNECTICUT GENERAL STATUTES, AS AMENDED, OR OTHER STATUTE OR STATUTES AFFECTING
PREJUDGMENT REMEDIES AND AUTHORIZE THE AGENT'S ATTORNEY TO ISSUE A WRIT FOR A
PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A
COPY OF THIS WAIVER. FURTHER, TO THE EXTENT ALLOWED UNDER APPLICABLE LAW,
BORROWER HEREBY WAIVES DEMAND, PRESENTMENT FOR PAYMENT, PROTEST, NOTICE OF
PROTEST, NOTICE OF DISHONOR, DILIGENCE IN COLLECTION, NOTICE OF NONPAYMENT OF
THE NOTE AND ANY AND ALL NOTICES OF A LIKE NATURE.
Section 11.8 Entire Agreement; Severability of Provisions.
(a) This Agreement and the other Loan Documents collectively constitute the
entire agreement and understanding between the parties hereto relating to the
transactions contemplated by this Agreement and supersede any and all
contemporaneous and prior agreements, representations, arrangements and
understandings (written or oral, express or implied) relating to the subject
matter hereof.
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(b) If any term or provision of any of the Loan Documents or the
application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be ineffective
as to such jurisdiction only to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
terms and provisions thereof or the application of such term or provision to
circumstances other than those as to which it is held invalid or unenforceable.
Section 11.9 Estoppel Certificates. Within fifteen (15) days after the
Agent requests Borrower to do so, Borrower shall cause its chief financial
officer to duly execute and deliver to the Agent a statement certifying (a) that
this Agreement, the Notes, and the other Loan Documents to which Borrower is a
party are in full force and effect and have not been modified except as
described in said statement, (b) the date to which interest on the Notes has
been paid, (c) the unpaid principal balance of the Notes, (d) whether to
Borrower's knowledge an Event of Default has occurred and is continuing, and if
so, describing in reasonable detail each such Event of Default of which it has
knowledge, (e) whether to its knowledge Borrower has any defense, setoff, or
counterclaim to the payment or performance of any of its obligations in
accordance with the respective terms of this Agreement, the Notes, and the other
Loan Documents, as the case may be, and, if so, describing each defense, setoff,
or counterclaim of which it has knowledge in reasonable detail (including where
applicable the amount thereof), and (f) as to any other matter reasonably
requested by the Agent.
Section 11.10 Waiver of Jury Trial and Consequential Damages.
(a) BORROWER HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (1) ARISING UNDER
THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE; AND BORROWER HEREBY AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY, AND THE AGENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH OF THEM TO THE
WAIVER OF ITS RIGHT TO TRIAL BY JURY.
(b) NONE OF THE AGENT, ANY LENDER, BORROWER, OR ANY AGENT OR ATTORNEY OF
EITHER OF THEM SHALL BE LIABLE TO ANY OF THE OTHERS FOR CONSEQUENTIAL DAMAGES
ARISING FROM ANY BREACH OF CONTRACT, TORT, OR OTHER WRONG RELATING TO THE
ESTABLISHMENT, ADMINISTRATION, OR COLLECTION OF THE OBLIGATIONS RELATING IN ANY
WAY TO THIS AGREEMENT, THE NOTES, OR ANY OF THE OTHER LOAN DOCUMENTS, OR THE
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ACTION OR INACTION OF ANY OF SUCH PERSONS UNDER ANY ONE OR MORE HEREOF OR
THEREOF.
(c) IN THE EVENT THE AGENT SEEKS TO TAKE POSSESSION OF ANY OR ALL OF THE
COLLATERAL BY COURT PROCESS OR OTHER METHOD AVAILABLE UNDER THE LAW, BORROWER
IRREVOCABLY WAIVES ANY BOND AND ANY SURETY OR SECURITY RELATING THERETO REQUIRED
BY ANY STATUTE, COURT RULE OR OTHERWISE AS AN INCIDENT TO SUCH POSSESSION, AND
WAIVES ANY DEMAND FOR POSSESSION PRIOR TO THE COMMENCEMENT OF ANY SUIT OR ACTION
TO RECOVER WITH RESPECT THERETO. BORROWER FURTHER WAIVES THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTION LAWS.
Section 11.11 Replacement of the Note. Upon receipt by Borrower of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction, or mutilation of the Notes, and (a) in the case of loss, theft, or
destruction, of indemnity reasonably satisfactory and furnished without cost to
Borrower (provided, if the holder of such Note is a Lender or a bank, insurance
company, or other institutional lender, its own unsecured agreement of indemnity
shall be satisfactory), or (b) in the case of mutilation, upon surrender and
cancellation thereof, Borrower will execute and deliver in lieu thereof a
replacement Note of like tenor.
Section 11.12 Survival of Representations and Warranties. All
representations, warranties, and covenants made by Borrower in this Agreement or
any of the other Loan Documents or in any certificate or other writing delivered
by it or on its behalf thereunder shall be considered to have been relied upon
by the Agent and each Lender and shall survive the delivery of this Agreement
and the other Loan Documents. All statements in any such certificate or other
writing shall constitute representations and warranties of Borrower hereunder.
Section 11.13 Further Assurances. Borrower from time to time shall execute
and deliver to Lender such additional documents and will provide such additional
information as the Agent may reasonably require to carry out the terms of this
Agreement and to keep the Agent and each Lender informed of the status and
affairs of Borrower.
Section 11.14 Construction. Each covenant contained in this Agreement shall
be construed (absent an express contrary provision therein) as being independent
of each other covenant contained herein, and compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant.
Section 11.15 Captions. Article and Section titles in the Loan Documents
are included for convenience only and do not define, limit, or describe the
scope of the provisions thereof.
Section 11.16 Opinion Letter. The obligation of the Agent and the Lenders
to make the Loans is subject to receipt by it of an opinion of counsel to
Borrower dated as of the closing date as to certain matters specified in this
Agreement. Borrower having consulted with their legal counsel acknowledges that
the delivery of the opinion may create an attorney/client relationship between
counsel to Borrower and the Agent or any Lender and Borrower knowingly waives
any resulting conflict of interest, present or future, arising out of the
delivery of the opinion.
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Section 11.17 Examination of Records. Not more than two (2) times per year
(unless an Event of Default shall have occurred and be continuing, in which
event such right shall be unlimited), the Agent will have the right to conduct
field audits or otherwise make periodic examinations of the books, records and
operations of Borrower and review and verify the Receivables of Borrower. All
costs arising in connection with any exercise of the Agent's rights under this
Section 11.17 shall be at the rate of $850 per man day plus out-of-pocket
expenses and shall be for the account of Borrower.
Section 11.18 Releases. Borrower hereby acknowledges that it has been
represented by competent counsel in connection with this transaction and has
been fully advised by such counsel of the full range of rights and obligations
possessed by them and undertaken or received pursuant to the terms of this
Agreement and, specifically, the provisions of this section of the Agreement.
Borrower hereby knowingly and, after consultation with counsel, freely
acknowledges and agrees that it does not now have nor know of any basis for any
claim in tort, contract or otherwise against the Lender Parties for breach of
any of the terms of the documents evidencing or securing the Loans or which may
have arisen out of the relationship between them and any of Lender Parties
relating to the Loans up to and through the date of this Agreement. Borrower
acknowledges and agrees that this Agreement was negotiated, executed and
delivered freely and with full and informed knowledge of the consequences of
this Agreement and that it has executed this Agreement without duress and that
the Agent and each Lender has proceeded in a commercially reasonable manner in
light of all the facts and circumstances surrounding the transaction which are
the subject of this Agreement.
Section 11.19 Counterparts. This Agreement may be executed and delivered in
any number of counterparts. Each counterpart shall constitute an original, but
all counterparts together shall constitute but one and the same agreement.
Section 11.20 Subsequent Bankruptcy. In the event of Borrower's subsequent
default hereunder, Borrower hereby covenants not to impede the Agent and each
Lender's rightful exercise of its rights under the Loan Documents by seeking
protection under Title 11 of the United States Bankruptcy Code. Borrower hereby
agrees that in consideration of the mutual covenants and promises contained
herein and the other Loan Documents, Borrower will not seek protection under
Title 11 of the United States Bankruptcy Code. In the event that an order for
relief pursuant to Title 11 of the United States Bankruptcy Code is entered
against Borrower, Borrower hereby consents to relief from the automatic stay
pursuant to 11 U.S.C. ss. 362 and hereby irrevocably waives all defenses or
objections thereto, in order to permit the Agent and each Lender to pursue its
respective rights under general law.
Section 11.21 Judgment.
(a) If for the purposes of obtaining judgment in any court it is necessary
to convert a sum due hereunder or under the Notes in any currency (the "Original
Currency") into another currency (the "Other Currency") the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which is in accordance with
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normal banking procedures the Lender could purchase the Original Currency with
the Other Currency on the first Business Day preceding that on which final
judgment is given.
(b) The obligation of the Borrower in respect of any sum due in the
Original Currency from it to the Agent or any Lender hereunder or under the
Notes shall, notwithstanding any judgment in any Other Currency, be discharged
only to the extent that on the Business Day following receipt by the Agent or
such Lender of any sum adjudged to be so due in such Other Currency may in
accordance with normal banking procedures purchase dollars with such Other
Currency; if the amount of the Original Currency so purchased is less than the
sum originally due to Lender in the Original Currency, the Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Agent or such Lender against such loss, and if the amount of the Original
Currency so purchased exceeds the sum originally due to Lender in the Original
Currency, the Agent or such Lender agrees to remit to Borrower such excess.
Section 11.22 Maximum Rate of Interest. All agreements between Borrower,
the Agent and each Lender are hereby expressly limited so that in no contingency
or event whatsoever, whether by reason of acceleration or maturity of the
indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to
be paid to the Agent and each Lender for the use or the forbearance of the
indebtedness evidenced hereby exceed the maximum permissible under applicable
law. As used herein, the term "applicable law" shall mean the law in effect as
of the date hereof provided, however that in the event there is a change in the
law which results in a higher permissible rate of interest, then this Agreement
and the Notes shall be governed by such new law as of its effective date. In
this regard, it is expressly agreed that it is the intent of the Borrower, the
Agent and each Lender in the execution, delivery and acceptance of this
Agreement and the Notes to contract in strict compliance with the laws of the
State of Connecticut from time to time in effect. If, under or from any
circumstances whatsoever, fulfillment of any provision hereof or of any of the
Loan Documents at the time of performance of such provision shall be due, shall
involve transcending the limit of such validity prescribed by applicable law,
then the obligation to be fulfilled shall automatically be reduced to the limits
of such validity, and if under or from circumstances whatsoever the Agent or any
Lender should ever receive as interest an amount which would exceed the highest
lawful rate, such amount which would be excessive interest shall be applied to
the reduction of the principal balance evidenced hereby and not to the payment
of interest. This provision shall control every other provision of all
agreements between Borrower, the Agent and each Lender.
Section 11.23 Payments Pro Rata. Each of the Lenders agrees that, if it
should receive any amount hereunder (whether by voluntary payment, by
realization upon security, by the exercise of the right of setoff or banker's
lien, by counterclaim or cross action, by the enforcement of any right under the
Loan Documents, or otherwise), which is applicable to the payment of the
principal of, or interest on, the Loans, Unpaid Reimbursement Obligations or
Letter of Credit fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
Obligations of the
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respective Borrower to such Lenders in such amount as shall result in a
proportional participation by all the Lenders in such amount; provided, that if
all or any portion of such excess amount is thereafter recovered from such
Lenders, such purchase shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest. Without limiting the generality
of the foregoing, FCC agrees that in the event that it receives proceeds from
(i) its first priority pledge of collateral located in the Netherlands with
respect to which the Agent has a second priority pledge or (ii) its first
priority charge on collateral located in the United Kingdom with respect to
which the Agent has a second priority charge, it shall share such proceeds with
HSBC in accordance with their respective aggregate Commitments. Notwithstanding
anything to the contrary contained herein, this paragraph shall be subject to
the express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Lenders as opposed to Defaulting Lenders.
Section 11.24 Domicile of Loans. Each Lender may transfer and carry its
Loans at, to or for the account of any office, Subsidiary or Affiliate of such
Lender. Notwithstanding anything to the contrary contained herein, to the extent
that a transfer of Loans pursuant to this Section 11.24 would, at the time of
such transfer, result in increased costs under Section 2.11 or 2.12 from those
being charged by the respective Lender prior to such transfer, then the Borrower
shall not be obligated to pay such increased costs (although the Borrower shall
be obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective transfer).
Section 11.25 Register. The Borrower hereby designates the Agent to serve
as its agent, solely for purposes of this Section 11.25, to maintain a register
(the "Register") on which it will record the Commitments from time to time of
each of the Lenders, the Loans made by each of the Lenders and each repayment in
respect of the principal amount of the Loans of each Lender. Failure to make any
such recordation, or any error in such recordation, shall not affect the
Borrower's obligations in respect of such Loans. With respect to any Lender, the
transfer of the Commitments of such Lender and the rights to the principal of,
and interest on, any Loan made pursuant to such Commitments shall not be
effective until such transfer is recorded on the Register maintained by the
Agent with respect to ownership of such Commitments and Loans and prior to such
recordation all amounts owing to the transferor with respect to such Commitments
and Loans shall remain owing to the transferor. The registration of assignment
or transfer of all or part of any Commitments and Loans shall be recorded by the
Agent on the Register only upon the acceptance by the Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
11.4(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Agent for acceptance and registration of assignment or transfer
of all or part of a Loan, or as soon thereafter as practicable, the assigning or
transferor Lender shall surrender the Note (if any) evidencing such Loan, and
thereupon one or more new Notes in the same aggregate principal amount shall be
issued to the assigning or transferor Lender and/or the new Lender at the
request of any such Lender. The Borrower agrees to indemnify the Agent from and
against any and all losses, claims, damages and liabilities of whatsoever nature
which may be imposed on, asserted against or incurred by the Agent in performing
its duties under this Section 11.25.
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Section 11.26 Confidentiality.
(a) Subject to the provisions of clause (b) of this Section 11.26, each
Lender agrees that it will use its reasonable efforts not to disclose without
the prior consent of the Borrower (other than to its affiliates, employees,
auditors, advisors or counsel or to another Lender if such Lender or such
Lender's holding or parent company in its sole discretion determines that any
such party should have access to such information, provided such Persons shall
be subject to the provisions of this Section 11.26 to the same extent as such
Lender) any information with respect to the Borrower or any of its Subsidiaries
which is now or in the future furnished by or on behalf of the Borrower or any
of its Subsidiaries pursuant to this Agreement or any other Loan Document which
information is, at the time of its disclosure, confidential and/or proprietary
and clearly identified as such in writing, provided, that any Lender may
disclose any such information (i) as has become generally available to the
public other than by virtue of a breach of this Section 11.26(a) by the
respective Lender, (ii) as may be required or appropriate in any report,
statement or testimony submitted to any municipal, state or Federal regulatory
body having or claiming to have jurisdiction over such Lender or to the Federal
Reserve Board or the Federal Deposit Insurance Corporation or similar
organizations (whether in the United States or elsewhere) or their successors,
(iii) as may be required or appropriate in respect to any summons or subpoena or
in connection with any litigation, (iv) in order to comply with any law, order,
regulation or ruling applicable to such Lender, (v) to the Agent, (vi) to any
direct or indirect contractual counterparty in any swap, hedge or similar
agreement (or to any such contractual counterparty's professional advisor), so
long as such contractual counterparty (or such professional advisor) agrees to
be bound by the provisions of this Section 11.26 and (vii) to any prospective or
actual transferee or participant in connection with any contemplated transfer or
participation of any of the Notes or Commitments or any interest therein by such
Lender, provided that such prospective transferee agrees to be bound by the
confidentiality provisions contained in this Section 11.26.
(b) The Borrower hereby acknowledges and agrees that each Lender may share
with any of its affiliates, and such affiliates may share with such Lender, any
information related to Holdings or any of its Subsidiaries (including, without
limitation, any non-public customer information regarding the creditworthiness
of The Borrower and its Subsidiaries), provided, such Persons shall be subject
to the provisions of this Section 11.26 to the same extent as such Lender.
Section 11.27 Superseding Original Loan Agreement. This Agreement shall
supersede the Original Loan Agreement. On the date hereof, the rights and
obligations of the parties under the Original Loan Agreement shall be subsumed
within and governed by this Agreement; provided that the provisions of the
Original Loan Agreement shall remain in full force and effect prior to the date
hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the date first above written.
WITNESSES AS TO ALL BORROWER:
BORROWERS + all signatories Q.E.P. CO., INC.
/s/ [ILLEGIBLE] By /s/ Xxxx Xxxxxxxxx
----------------------------- ------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
/s/ [ILLEGIBLE] Duly Authorized
-----------------------------
Q.E.P.-O'TOOL, INC.
By /s/ Xxxx Xxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
XXXXXX TOOL CORPORATION
By /s/ Xxxx Xxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
XXXXXXX CONSOLIDATED
INDUSTRIES, INC.
By /s/ Xxxx Xxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
XXXXXXX HOLDING INTERNATIONAL INC.
By /s/ Xxxx Xxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
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Duly Authorized
XXXXXXX COMPANY CANADA LIMITED
By /s/ Xxxx Xxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
XXXXXXX U. K. LIMITED
By /s/ Xxxx Xxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
By /s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx
Its President, Director
Duly Authorized
XXXXXXX GERMANY GmbH
By /s/ Xxxx Xxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
By /s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx
Its President, Director
Duly Authorized
XXXXXXX S.A.R.L.
By /s/ Xxxx Xxxxxxxxx
------------------------------------
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Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
By /s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx
Its President, Director
Duly Authorized
XXXXXXX JAPAN KK
By /s/ Xxxx Xxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
By /s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx
Its President
Duly Authorized
XXXXXXX XXXXXXX B.V.
By /s/ Xxxx Xxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
By /s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx
Its President, Director
Duly Authorized
Q.E.P. HOLDING B.V.
By /s/ Xxxx Xxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
87
/s/ Xxxxx Xxxxx
By ----------------------------------
Xxxxx Xxxxx
Its President, Director
Duly Authorized
Q.E.P. STONE HOLDINGS, INC.
/s/ Xxxx Xxxxxxxxx
By ----------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
Q.E.P. AUST. PTY. LIMITED
/s/ Xxxx Xxxxxxxxx
By ----------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
/s/ Xxxxx Xxxxx
By ----------------------------------
Xxxxx Xxxxx
Its President, Director
Duly Authorized
Q.E.P. CO. NEW ZEALAND, LIMITED
/s/ Xxxx Xxxxxxxxx
By ----------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
/s/ Xxxxx Xxxxx
By ----------------------------------
Xxxxx Xxxxx
Its President, Director
Duly Authorized
Q.E.P. CHILE LIMITADA
/s/ Xxxx Xxxxxxxxx
By ----------------------------------
Xxxx Xxxxxxxxx
88
Its Director, Secretary
Duly Authorized
/s/ Xxxxx Xxxxx
By ----------------------------------
Xxxxx Xxxxx
Its President, Director
Duly Authorized
Q.E.P. ZOCALIS HOLDING, L.L.C.
/s/ Xxxx Xxxxxxxxx
By ----------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
Q.E.P. ZOCALIS S.R.L.
/s/ Xxxx Xxxxxxxxx
By ----------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
/s/ Xxxxx Xxxxx
By ----------------------------------
Xxxxx Xxxxx
Its President, Director
Duly Authorized
BOIARDI PRODUCTS CORPORATION
/s/ Xxxx Xxxxxxxxx
By ----------------------------------
Xxxx Xxxxxxxxx
Its Director, Secretary
Duly Authorized
WITNESSES AS TO_______: AGENT:
FLEET CAPITAL CORPORATION
_____________________________ By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Xxxxxxx Xxxxxx, Vice President
_____________________________
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WITNESSES AS TO FCC : LENDERS:
FLEET CAPITAL CORPORATION
_____________________________ By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Xxxxxxx Xxxxxx, Vice President
_____________________________
WITNESSES AS TO HSBC : LENDERS:
HSBC BANK USA
_____________________________ By: /s/ Xxxxxxx Xxxxxxxxx
----------------------------------
Xxxxxxx Xxxxxxxxx
Its Vice President
_____________________________
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