SECURED CREDIT AGREEMENT
BY AND AMONG
XXXXX NATURALS/4 HEALTH, INC.
AS BORROWER,
THE LENDERS NAMED HEREIN,
AS LENDERS,
AND
FIRST SOURCE FINANCIAL LLP,
AS AGENT AND A LENDER
DATED AS OF
JUNE 10, 1999
TABLE OF CONTENTS
SECTION PAGE
------- ----
SECTION 1 CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.1 CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . .1
SECTION 2 COMMITMENTS OF LENDERS; LOAN REQUESTS; REDUCTION
OR TERMINATION OF THE COMMITMENTS; PREPAYMENTS; MAKING OF
PAYMENTS; SETOFF/ . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.1 COMMITMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.2 REVOLVING LOAN TERMINATION DATE. . . . . . . . . . . . . . . . 24
SECTION 2.3 LOAN REQUESTS. . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.4 CERTAIN WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.5 CERTAIN MANDATORY AND PERMITTED PREPAYMENTS OF
THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.6 VOLUNTARY PREPAYMENT OF REVOLVING LOANS; VOLUNTARY
REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT . . . . . 28
SECTION 2.7 MANDATORY PREPAYMENTS ON REVOLVING LOANS . . . . . . . . . . . 28
SECTION 2.8 [INTENTIONALLY OMITTED]. . . . . . . . . . . . . . . . . . . . 28
SECTION 2.9 MAKING OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.10 DUE DATE EXTENSION . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.11 SET OFF AND SHARING OF PAYMENTS. . . . . . . . . . . . . . . . 29
SECTION 2.12 CERTAIN MATTERS RELATING TO LETTERS OF CREDIT. . . . . . . . . 29
2.12.1 ISSUANCE OF LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . 30
2.12.2 TERMS OF LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . 30
2.12.3 LENDERS' PARTICIPATION . . . . . . . . . . . . . . . . . . . . . 31
2.12.4 NOTICE OF ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . 31
2.12.5 PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT . . . . . . . . 31
2.12.6 PAYMENT BY LENDERS . . . . . . . . . . . . . . . . . . . . . . . 32
2.12.7 ISSUING BANK . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.12.8 OBLIGATIONS ABSOLUTE . . . . . . . . . . . . . . . . . . . . . . 33
2.12.9 AGENT'S EXECUTION OF APPLICATIONS AND OTHER ISSUING
BANK DOCUMENTATION; RELIANCE ON CREDIT AGREEMENT
BY ISSUING BANK. . . . . . . . . . . . . . . . . . . . . . . . . 34
2.12.10 CASH COLLATERAL. . . . . . . . . . . . . . . . . . . . . . . . 35
2.12.11 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 2.13 LOAN ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 2.14 STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 3 NOTES; RECORDKEEPING. . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.1 TERM NOTE. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
i
SECTION 3.2 REVOLVING NOTE . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4 INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.1 INTEREST RATES . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.2 DEFAULT INTEREST . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.3 CONVERSION OR CONTINUATION . . . . . . . . . . . . . . . . . . 39
SECTION 4.4 SPECIAL PROVISIONS GOVERNING LIBOR RATE LOANS. . . . . . . . . 39
SECTION 4.5 INTEREST PAYMENT DATES . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.6 SETTING OF RATES . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.7 COMPUTATION OF INTEREST. . . . . . . . . . . . . . . . . . . . 42
SECTION 5 FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.1 NON-USE FEES . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.2 COMMITMENT FEE . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.3 CLOSING FEE. . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.4 LETTER OF CREDIT FEES. . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.5 AUDIT FEES . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.6 COMPUTATION OF FEES. . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6 ACCOUNT AGREEMENTS; ACCOUNTS: LIST OF ACCOUNTS
AND ACCOUNT STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.1 ACCOUNT AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.2 DEPOSIT ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.3 LIST OF ACCOUNTS AND ACCOUNT STATEMENTS. . . . . . . . . . . . 45
SECTION 7 PROCEEDS OF COLLATERAL; APPLICATION OF FUNDS;DEEMED LOANS . . . . . . . 45
SECTION 7.1 PROCEEDS OF COLLATERAL; NOTICES TO ACCOUNT DEBTORS;
LOCKBOX. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.2 APPLICATION OF MASTER ACCOUNT FUNDS. . . . . . . . . . . . . . 45
SECTION 7.3 APPLICATION OF FUNDS AVAILABLE FOR LOAN REPAYMENTS . . . . . . 46
SECTION 7.4 APPLICATION UPON AN EVENT OF DEFAULT . . . . . . . . . . . . . 46
SECTION 7.5 DEEMED LOANS . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.6 APPLICATION OF PROCEEDS. . . . . . . . . . . . . . . . . . . . 47
SECTION 8 INCREASED COSTS AND OTHER SPECIAL PROVISIONS. . . . . . . . . . . . . . 48
SECTION 8.1 INCREASED COSTS. . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.2 FUNDING LOSSES . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.3 DISCRETION OF LENDERS AS TO MANNER OF FUNDING. . . . . . . . . 49
SECTION 8.4 CONCLUSIVENESS OF STATEMENTS; SURVIVAL OF PROVISIONS . . . . . 49
SECTION 9 COLLATERAL AND ELIGIBILITY REQUIREMENTS . . . . . . . . . . . . . . . . 50
SECTION 9.1 ELIGIBLE ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . 50
ii
SECTION 9.2 VERIFICATION OF ACCOUNTS . . . . . . . . . . . . . . . . . . . 51
SECTION 9.3 ELIGIBLE INVENTORY . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.4 SECURITY INTEREST. . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.5 CONSIGNED INVENTORY. . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.6 COLLATERAL DOCUMENTS . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.7 SUBSEQUENTLY ACQUIRED PROPERTY . . . . . . . . . . . . . . . . 52
SECTION 9.8 CHANGE OF LOCATION OR NAME . . . . . . . . . . . . . . . . . . 53
SECTION 9.9 DELIVERIES; FURTHER ASSURANCES . . . . . . . . . . . . . . . . 53
SECTION 9.10 PERMITTED HZ DISPOSITION . . . . . . . . . . . . . . . . . . . 54
SECTION 10 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.1 DUE ORGANIZATION, AUTHORIZATION, ETC.. . . . . . . . . . . . . 54
SECTION 10.2 CERTAIN AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.3 FINANCIAL INFORMATION; FINANCIAL CONDITION . . . . . . . . . . 54
SECTION 10.4 LITIGATION AND CONTINGENT OBLIGATIONS. . . . . . . . . . . . . 55
SECTION 10.5 LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.6 CONTRACTS; ABSENCE OF DEFAULT. . . . . . . . . . . . . . . . . 56
SECTION 10.7 EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.8 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING
COMPANY ACT. . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.9 REGULATIONS U AND X. . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.10 PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.11 CONFIRMATION OF WARRANTIES . . . . . . . . . . . . . . . . . . 58
SECTION 10.12 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.13 MATERIAL DISRUPTIONS . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.14 PATENTS, TRADEMARKS, ETC. . . . . . . . . . . . . . . . . . . 58
SECTION 10.15 OWNERSHIP OF PROPERTIES; PROPERTY SCHEDULE . . . . . . . . . . 59
SECTION 10.16 BUSINESS LOCATIONS; TRADE NAMES. . . . . . . . . . . . . . . . 59
SECTION 10.17 ACCURACY OF INFORMATION. . . . . . . . . . . . . . . . . . . . 59
SECTION 10.18 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.19 HAZARDOUS MATERIALS. . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.20 AGENT'S FEES . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.21 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.22 SECURITIES LAWS. . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.23 GOVERNMENTAL AUTHORIZATIONS. . . . . . . . . . . . . . . . . . 61
SECTION 10.24 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.25 EMPLOYEES AND LABOR. . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.26 [INTENTIONALLY OMITTED]. . . . . . . . . . . . . . . . . . . . 62
SECTION 10.27 SOLVENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.28 COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.29 REAL ESTATE. . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.30 RETAIL SALES . . . . . . . . . . . . . . . . . . . . . . . . . 62
iii
SECTION 11 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 11.1 REPORTS, CERTIFICATES AND OTHER INFORMATION. . . . . . . . . . 63
SECTION 11.2 CORPORATE EXISTENCE; FOREIGN QUALIFICATION . . . . . . . . . . 66
SECTION 11.3 BOOKS, RECORDS AND INSPECTIONS . . . . . . . . . . . . . . . . 67
SECTION 11.4 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 11.5 TAXES AND LIABILITIES. . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.6 EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.7 COLLATERAL DOCUMENTS . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.8 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.9 MAINTENANCE OF PERMITS . . . . . . . . . . . . . . . . . . . . 69
SECTION 11.10 PURCHASE, REDEMPTION, DISTRIBUTION, INTEREST AND PAYMENT
RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 11.11 LOANS, ADVANCES OR INVESTMENTS . . . . . . . . . . . . . . . . 69
SECTION 11.12 MERGERS, CONSOLIDATIONS, SALES . . . . . . . . . . . . . . . 69
SECTION 11.13 UNCONDITIONAL PURCHASE OBLIGATIONS . . . . . . . . . . . . . . 69
SECTION 11.14 REGULATIONS U AND X. . . . . . . . . . . . . . . . . . . . . . 69
SECTION 11.15 SUBSIDIARIES.. . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.16 NO AMENDMENT OF CERTAIN DOCUMENTS. . . . . . . . . . . . . . . 70
SECTION 11.17 OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.18 BUSINESS ACTIVITIES; NAME. . . . . . . . . . . . . . . . . . . 70
SECTION 11.19 TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . . 70
SECTION 11.20 ENVIRONMENTAL LIABILITIES. . . . . . . . . . . . . . . . . . . 70
SECTION 11.21 INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.22 LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 11.23 FISCAL YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 11.24 LANDLORD AND WAREHOUSEMAN AGREEMENTS . . . . . . . . . . . . . 71
SECTION 11.25 MAINTENANCE OF REAL ESTATE . . . . . . . . . . . . . . . . . . 71
SECTION 11.26 ACCOUNT RECORDS. . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11.27 INSTRUMENTS AND CHATTEL PAPER. . . . . . . . . . . . . . . . . 72
SECTION 11.28 INVENTORY RECORDS. . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11.29 COLLATERAL LOCATIONS . . . . . . . . . . . . . . . . . . . . . 73
SECTION 11.30 DISPOSAL OF PROPERTY . . . . . . . . . . . . . . . . . . . . . 73
SECTION 11.31 IMPAIRMENT AGREEMENTS. . . . . . . . . . . . . . . . . . . . . 74
SECTION 11.32 YEAR 2000. . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 11.33 CORPORATE ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 11.34 FINANCIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12 CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 12.1 INITIAL LOANS. . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 12.2 ALL LOANS; LC GUARANTIES . . . . . . . . . . . . . . . . . . . 78
SECTION 13 EVENTS OF DEFAULT AND THEIR EFFECT. . . . . . . . . . . . . . . . . . . 79
SECTION 13.1 EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . 79
iv
SECTION 13.2 EFFECT OF EVENT OF DEFAULT . . . . . . . . . . . . . . . . . . 82
SECTION 13.3 RIGHTS AND REMEDIES GENERALLY. . . . . . . . . . . . . . . . . 82
SECTION 13.4 ENTRY UPON PREMISES AND ACCESS TO INFORMATION. . . . . . . . . 83
SECTION 13.5 SALE OR OTHER DISPOSITION OF COLLATERAL BY AGENT . . . . . . . 83
SECTION 13.6 NOTICE TO ACCOUNT DEBTORS. . . . . . . . . . . . . . . . . . . 83
SECTION 13.7 WAIVER OF DEMAND . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 13.8 WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 14 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 14.1 WAIVER; AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 14.2 CONFIRMATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 14.3 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 14.4 COSTS, EXPENSES AND TAXES. . . . . . . . . . . . . . . . . . . 86
SECTION 14.5 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 14.6 SUBMISSION TO JURISDICTION . . . . . . . . . . . . . . . . . . 87
SECTION 14.7 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 14.8 SEVERAL OBLIGATIONS; NATURE OF LENDER'S RIGHTS . . . . . . . . 88
SECTION 14.9 ENTRY INTO AGREEMENT . . . . . . . . . . . . . . . . . . . . . 88
SECTION 14.10 LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 14.11 JURY TRIAL; DAMAGE WAIVER. . . . . . . . . . . . . . . . . . . 89
SECTION 14.12 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . 89
SECTION 14.13 MARSHALLING. . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 14.14 WAIVERS WITH RESPECT TO OTHER INSTRUMENTS. . . . . . . . . . . 89
SECTION 14.15 RETENTION OF BORROWER'S DOCUMENTS. . . . . . . . . . . . . . . 90
SECTION 14.16 SURVIVAL OF WARRANTIES . . . . . . . . . . . . . . . . . . . . 90
SECTION 14.17 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 14.18 EXCEPTIONS TO COVENANTS. . . . . . . . . . . . . . . . . . . . 90
SECTION 14.19 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 14.20 REINSTATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 14.21 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 14.22 ACKNOWLEDGMENT . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 14.23 CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 15 ASSIGNMENT AND PARTICIPATION; AGENT . . . . . . . . . . . . . . . . . . 92
SECTION 15.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND NOTES. . . . . . . 92
SECTION 15.2 AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
15.2.1 APPOINTMENT OF AGENT . . . . . . . . . . . . . . . . . . . . . 94
15.2.2 NATURE OF DUTIES OF AGENT. . . . . . . . . . . . . . . . . . . 94
15.2.3 LACK OF RELIANCE ON AGENT. . . . . . . . . . . . . . . . . . . 94
15.2.4 CERTAIN RIGHTS OF AGENT. . . . . . . . . . . . . . . . . . . . 95
15.2.5 RELIANCE BY AGENT. . . . . . . . . . . . . . . . . . . . . . . 95
15.2.6 INDEMNIFICATION OF AGENT . . . . . . . . . . . . . . . . . . . 95
15.2.7 AGENT IN ITS INDIVIDUAL CAPACITY . . . . . . . . . . . . . . . 96
v
15.2.8 HOLDERS OF NOTES . . . . . . . . . . . . . . . . . . . . . . . 96
15.2.9 SUCCESSOR AGENT. . . . . . . . . . . . . . . . . . . . . . . . 96
15.2.10 COLLATERAL MATTERS . . . . . . . . . . . . . . . . . . . . . . 97
15.2.11 ACTIONS WITH RESPECT TO DEFAULTS . . . . . . . . . . . . . . . 98
15.2.12 DELIVERY OF INFORMATION. . . . . . . . . . . . . . . . . . . . 98
SECTION 15.3 DISBURSEMENT OF FUNDS. . . . . . . . . . . . . . . . . . . . . 98
SECTION 15.4 AGENT'S DISCRETION . . . . . . . . . . . . . . . . . . . . . . 99
vi
vii
viii
ix
x
EXHIBITS
Exhibit A Form of Borrowing Base Certificate
Exhibit B Form of Notice of LIBOR Activity
Exhibit C Form of Term Note
Exhibit D Form of Revolving Note
Exhibit E Form of Security Agreement
Exhibit F Form of Stock Pledge Agreement
Exhibit G Form of Compliance Certificate
Exhibit H Form of Borrowing Certificate
Exhibit I Form of LC Guaranty Request
SCHEDULES
Schedule 1 Lenders and Lenders' Commitments
Schedule 1.1A Schedule of Debt Issuances
Schedule 6.3 Xxxxx Cash and Payroll Accounts
Schedule 9.1A Account Debtors Subject to 120-day Eligibility
Schedule 9.1B Certain Eligible Foreign Accounts
Schedule 9.8 Permitted Name and Location Change
Schedule 10.1 Jurisdictions; Corporate Existence; Foreign Qualifications
Schedule 10.4 Litigation and Contingent Obligations
Schedule 10.5 Liens
Schedule 10.6 Terminated or Defaulted Contracts
Schedule 10.12 Insurance
Schedule 10.14 Intellectual Property
Schedule 10.15 Real and Personal Property Not Covered by Collateral
Schedule 10.16 Business Locations; Trade Names
Schedule 10.18 Subsidiaries
Schedule 10.19 Hazardous Materials
Schedule 10.20 Certain Fees
Schedule 10.21 Taxes
Schedule 10.25 Labor; Collective Bargaining Agreements
Schedule 10.29 Real Estate
Schedule 11.11 Loans, Advances or Investments
Schedule 11.18 Business Activities
Schedule 11.19 Transactions with Affiliates
Schedule 11.21 Permitted Indebtedness
Schedule 11.29 Inventory on Consignment; Collateral Locations
Schedule 12.1 Indebtedness to be Refinanced
xi
SECURED CREDIT AGREEMENT
THIS SECURED CREDIT AGREEMENT (this "AGREEMENT") dated as of June 10,
1999 is entered into among Xxxxx Naturals/4 Health, Inc., a Utah corporation
("BORROWER"), the financial institutions identified on SCHEDULE 1 hereto
(together with each of their successors and assigns, hereinafter referred to
individually as a "LENDER" and collectively as the "LENDERS"), and First Source
Financial LLP, an Illinois registered limited liability partnership, acting as
agent for Lenders (in such capacity "AGENT").
RECITAL:
Borrower desires to borrow from Lenders and Lenders desire to lend to
Borrower on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the mutual agreements contained
herein, and subject to the terms and conditions hereof, the parties hereto agree
as follows:
SECTION 1 CERTAIN DEFINITIONS.
SECTION 1.1 CERTAIN DEFINITIONS. When used herein, the following
terms shall have the following meanings:
"ACCOUNT DEBTOR" shall mean any Person who is or may become obligated
on or under an Account.
"ACCOUNTS" of a Person shall mean all presently existing and hereafter
arising or acquired accounts, accounts receivable, contracts, notes, drafts,
acceptances, and other forms of obligations (including forms of obligations
evidenced by Chattel Paper, Documents or Instruments) now or hereafter owned or
held by or payable to such Person relating in any way to Inventory or arising
from the sale or lease of Inventory or the rendering of services by such Person
or howsoever otherwise arising, including the right to payment of any interest
or finance charges with respect thereto; all such merchandise that may be
reclaimed or repossessed or returned to such Person; all of such Person's rights
as an unpaid vendor, including stoppage in transit, reclamation, rescission,
replevin, and sequestration; all pledged assets and all letters of credit,
guaranty claims, Liens held by or granted to such Person to secure payment of
any Accounts; all proceeds and products of all of the foregoing described
properties and interests in properties; and all proceeds of insurance with
respect thereto; and all customer lists, ledgers, books of account, records,
computer programs, computer disks or tape files (including all microfilm),
computer printouts, computer runs, and other computer prepared information
relating to any of the foregoing.
"AFFILIATE" of any Person shall mean (a) any director (or Person
holding the equivalent position) or executive officer (or Person holding the
equivalent position) of such Person or of any Person described in CLAUSE (b)
with respect to such Person, and (b) any other Person which, directly or
indirectly, controls or is controlled by or under common control with such
Person
(excluding any trustee under, or any committee with responsibility for
administering, any Pension Plan). None of Lenders and Agent shall be deemed to
be an Affiliate of Borrower or any such Person. A Person shall be deemed to be
(x) "controlled by" any other Person if such other Person possesses, directly or
indirectly, power (i) to vote 20% or more of the securities or Equity Interests
having at the time of any determination hereunder voting power for the election
of directors of such Person (or Persons holding equivalent positions); or (ii)
to direct or cause the direction of the management and policies of such Person
whether by contract or otherwise; or (y) "controlled by" or "under common
control with" such other Person if such other Person is a member of the
immediate family of such Person or is the executor, administrator, or other
personal representative of such Person.
"AGENT" shall mean FSFP as agent for the benefit of Lenders, and not
in its individual capacity as a Lender, and any successor appointed pursuant to
SECTION 15.2.9.
"ANNUAL REPORT" - see SECTION 11.1(b).
"ASSET SALE" shall mean any sale, assignment, conveyance, transfer or
other disposition of any Property of Borrower other than (a) any sale or lease
of Inventory in the ordinary course of business, (b) any sale of obsolete or
unusable items of Equipment (other than Equipment described in CLAUSE (c) below)
so long as the aggregate proceeds of all such sales do not exceed $100,000 in
any Fiscal Year, and (c) any sale or trade-in of obsolete or unusable items of
Equipment which are promptly replaced with new items of Equipment of like
function and comparable value to the obsolete or unusable items of Equipment
when the same were new or not obsolete or unusable.
"ASSET SALE PROCEEDS" shall mean the aggregate cash proceeds payable
to Borrower in connection with any Asset Sale after deduction of all documented
costs and expenses of such Asset Sale.
"ASSIGNMENT AND ACCEPTANCE" - see SECTION 15.1.
"BANK AGENCY AGREEMENT" - see SECTION 6.1.
"BANKRUPTCY CODE" shall mean Xxxxx 00, Xxxxxx Xxxxxx Code, as amended
from time to time.
"BORROWER" - see Preamble.
"BORROWING AVAILABILITY" shall mean, at any date of determination, the
amount by which (a) the lesser of (i) the Revolving Commitment or (ii) the
Borrowing Base exceeds (b) Total Revolving and LC Exposure.
"BORROWING BASE" shall mean an amount equal to: (a) eighty-five
percent (85%) of the face amount (less discounts, credits and allowances which
may have been taken by or granted
2
to Account Debtors in connection therewith) then outstanding of existing
Eligible Accounts of Borrower, PLUS (b) sixty-five percent (65%) of (i) the
book value of the then existing Eligible Inventory (the book value of
Eligible Inventory to be determined at the lower of cost (determined on a
first-in, first-out ("FIFO") basis) or market) of Borrower, MINUS (ii) the
Test Count Reserve.
"BORROWING BASE CERTIFICATE" shall mean a certificate in substantially
the form of EXHIBIT A duly certified by the chief financial officer or treasurer
of Borrower.
"BORROWING CERTIFICATE" - see SECTION 12.2(c).
"BUSINESS DAY" shall mean any day of the year (other than any Saturday
or Sunday) on which the Federal Reserve Bank of Chicago, Illinois is open for
business in Chicago, Illinois and, when used in connection with LIBOR Rate
Loans, this definition will also exclude any day on which commercial banks are
not open for dealing in United States dollar deposits in the London (U.K.)
interbank market.
"CAP AMOUNT" shall mean, at any time, the sum of the reimbursement
obligations of Borrower guaranteed by each LC Guaranty at the time of its
issuance (such amount, with respect to any LC Guaranty, being herein called the
"RELEVANT CAP"); it being understood that:
(a) the Relevant Cap with respect to any LC Guaranty shall be reduced from
time to time by the Stated Amount of a Permitted LC covered thereby if
Agent shall have received from the applicable Issuing Bank evidence
satisfactory to Agent that the following conditions have been
satisfied: (i) such Permitted LC shall have terminated or expired in
accordance with its terms or such Permitted LC shall have been
surrendered to the Issuing Bank thereof and canceled and, in either
case, Issuing Bank shall have no further obligations thereunder or
(ii) if such Permitted LC shall have been drawn upon, the Issuing Bank
thereof shall have been fully reimbursed for the amount of such draw
or (iii) such Issuing Bank shall have consented in writing to a
reduction, equal to such Stated Amount in such Relevant Cap; and
(b) the Relevant Cap with respect to any LC Guaranty may be increased from
time to time by the Stated Amount of a Permitted LC to be covered
thereby if Agent shall have received evidence satisfactory to Agent
that such Permitted LC shall be issued in a manner permitted by this
Agreement concurrently with such increase;
PROVIDED, HOWEVER, that in no event shall the Cap Amount exceed $2,000,000 at
any time.
"CAPITALIZED LEASES" shall mean, as to any Person at any time, any
lease which, in accordance with GAAP, is required to be capitalized on the
balance sheet of such Person at such time, and "CAPITALIZED LEASE OBLIGATIONS"
of such Person at any time shall mean the aggregate amount which, in accordance
with GAAP, is required to be reported as a liability on the balance sheet of
such Person at such time as lessee under Capitalized Leases.
3
"CASH EQUIVALENTS" shall mean any or all of the following: obligations
of or guaranteed as to interest and principal by, the United States Government
maturing within 90 days after the date on which such obligations are purchased;
open market commercial paper of any corporation (other than Borrower or any of
its Affiliates) incorporated under the laws of the United States of America or
any State thereof or the District of Columbia rated "Prime-1" or its equivalent
by Xxxxx'x Investors Service, Inc. and "A-1" or its equivalent by Standard &
Poor's Ratings Group, a division of McGraw Hill, Inc.; or certificates of
deposit maturing within 90 days after the issuance thereof issued by commercial
banks organized under the laws of the United States of America or of any
political subdivision thereof and having a combined capital and surplus in
excess of $500,000,000; or money market mutual funds investing solely in the
foregoing cash equivalents or otherwise reasonably satisfactory to Agent.
"CASH INSTRUMENTS" shall mean all cash, checks, drafts and other
similar writings for the payment of money.
"CHANGE OF CONTROL" shall mean any Person or Group (other than Xxxx
Xxxxx) shall become the owner, directly or indirectly, beneficially or of
record, of shares representing more than 35% of the aggregate ordinary voting
power represented by any issued and outstanding capital stock of the Borrower on
a fully diluted basis.
"CHATTEL PAPER" of a Person shall mean any "chattel paper," as such
term is defined in the UCC, now owned or hereafter acquired by such Person,
wherever located.
"CLOSING DATE" shall mean the date on which the initial Loans
hereunder are made.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any replacements thereof .
"COLLATERAL" shall mean all property and/or rights on or in which a
Lien or security interest is granted to any one or more of Agent and Lenders (or
to any agent, trustee or other party acting on behalf of any one or more of
Agent and Lenders) to secure all or any of the Liabilities, including any such
Lien or security interest pursuant to this Agreement or any of the Collateral
Documents or any other agreements, instruments or documents provided for herein
or therein or delivered or to be delivered hereunder or thereunder or in
connection herewith or therewith.
"COLLATERAL ACCESS AGREEMENTS" shall mean any landlord waivers,
mortgagee waivers, bailee letters or any similar acknowledgment agreements of
any warehouseman or processor in possession of Inventory, in each case in a form
reasonably acceptable to Agent.
"COLLATERAL DOCUMENTS" shall mean, collectively, the Security
Agreement, the Collateral Access Agreements, the Bank Agency Agreement, LC
Guaranties, the Stock Pledge Agreement, any Uniform Commercial Code financing
statements, and any and all other documents
4
provided for in SECTION 9 or otherwise pursuant to which a Lien is granted to
any one or more of Agent and Lenders (or to any agent, trustee, or other
party acting on behalf of any one or more of Agent and Lenders) as security
for any of the Liabilities, and all agreements, instruments and documents,
including, without limitation, this Agreement and any security agreements,
loan agreements, notes, guarantees, mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, subordination agreements, pledges,
powers of attorney, consents, assignments, intercreditor agreements,
mortgagee waivers, reimbursement agreements, contracts, notices, leases,
financing statements, whether heretofore, now or hereafter executed by or on
behalf of Borrower or any Subsidiary in connection with the Liabilities, in
each case as the same may be amended, modified, continued or supplemented
from time to time.
"COMMITMENT" shall mean, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"Commitment" on SCHEDULE 1 to this Agreement or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 15.1, as such Commitment
may be adjusted from time to time in accordance with the provisions of SECTION
15.1.
"COMPLIANCE CERTIFICATE" - see SECTION 11.1(f).
"CONTINGENT OBLIGATION" as to any Person shall mean the undrawn face
amount of any letters of credit issued for the account of such Person and shall
also mean any obligation of such Person guaranteeing or in effect guaranteeing
any Indebtedness, leases, dividends, letters of credit or other obligations
("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (a) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the financial condition or solvency
of the primary obligor, (c) to purchase property, securities or services
primarily for the purpose of assuring the obligee under any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (d) otherwise to assure or hold harmless the obligee under such
primary obligation against loss in respect thereof; PROVIDED, HOWEVER, that the
term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation or, where such Contingent
Obligation is specifically limited to a portion of any such primary obligation,
that portion to which it is limited or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in good
faith.
"CONTRACT" shall mean each written agreement of Borrower with respect
to the sale of goods or services by Borrower.
5
"CONTRACTUAL OBLIGATION" of any Person shall mean any provision of any
security issued by such Person or of any agreement, document, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONTROLLED GROUP" shall mean Borrower, any Subsidiary and any
corporation, trade, business or other Person that is, along with Borrower, a
member of a controlled group of Persons or a controlled group of trades or
businesses or an affiliated service group as described in sections 414(b),
414(c) and 414(m), respectively, of the Code or in section 4001 of ERISA.
"CURRENT ASSETS" shall mean, at any date, the amount which, in
conformity with GAAP, would be set forth opposite the caption "total current
assets" (or any like caption) on a consolidated balance sheet of Borrower and
its Subsidiaries at such date, less (without duplication) Cash Instruments and
Cash Equivalents.
"CURRENT LIABILITIES" shall mean, at any date, the amount which, in
conformity with GAAP, would be set forth opposite the caption "total current
liabilities" (or any like caption) on a consolidated balance sheet of Borrower
and its Subsidiaries at such date, less any portion thereof attributable to the
Notes, bank overdrafts (but only to the extent repaid in full on the Business
Day following creation thereof), or any other Indebtedness incurred hereunder.
"DAILY SETTLEMENT DATE" - see SECTION 2.3(d).
"DEBT TO EBITDA RATIO" shall mean, for any calendar quarter, the ratio
of (a) Indebtedness of Borrower and its Subsidiaries at the end of such calendar
quarter, to (b) EBITDA of Borrower and its Subsidiaries for the four calendar
quarters ending with the last day of such calendar quarter (except that, for the
quarter ended September 30, 1999, EBITDA shall be determined for the three
calendar quarters then ending), all as determined on a consolidated basis in
accordance with GAAP.
"DEBT SALE PROCEEDS" shall mean the aggregate cash proceeds paid or
payable to Borrower in connection with the issuance of any Indebtedness by
Borrower (other than those issuances, if any, listed on SCHEDULE 1.1A), after
deduction of all documented costs and expenses of such issuance.
"DEFAULT INTEREST PERIOD" - see SECTION 4.2(b).
"DEFAULT RATE" - see SECTION 4.2(a).
"DESIGNATED ACCOUNT" shall mean Borrower's Accounts on the date hereof
from Esuroku Co., Ltd. which have an aggregate outstanding balance on the date
hereof in the amount of $309,000.50 as per the June 2, 1999 "Accounts Receivable
Aged Invoice Report" of Borrower.
6
"DOCUMENTS" of a Person shall mean any "documents" as such term is
defined in the UCC, now owned or hereafter acquired by such Person, wherever
located.
"DOLLAR(S)" and the sign "$" shall mean lawful money of the United
States of America.
"EBITDA" shall mean, for any period, the Net Income for such period,
PLUS, to the extent deducted in computing such Net Income, the sum of (a) all
Federal, state, local and foreign income tax expense for such period, (b)
Interest Expense for such period, (c) depreciation and amortization expenses for
such period, (d) any extraordinary pre-tax non-cash losses for such period and
(e) any pre-tax non-cash costs associated with issuing stock options and
warrants and any write-offs of goodwill or intangible assets for such period,
MINUS, to the extent added in computing such Net Income, (i) any interest income
for such period and (ii) any extraordinary pre-tax non-cash gains for such
period, all as determined for Borrower and its Subsidiaries on a consolidated
basis in accordance with GAAP.
"ELECTRONIC NOTICE" - see SECTION 2.3(c).
"ELIGIBLE ACCOUNTS" shall have the meaning ascribed thereto in SECTION
9.1.
"ELIGIBLE INVENTORY" shall have the meaning ascribed thereto in
SECTION 9.3.
"EMPLOYEE BENEFIT PLAN" shall mean any "employee benefit plan," as
defined under Section 3(3) of ERISA or any other plan, policy, program,
arrangement or agreement, whether or not written, with respect to current
employees, former employees, independent contractors or leased employees, as
defined in Code Section 414(n), or the beneficiaries or dependents thereof which
is or has been maintained by Borrower or a current or past member of its
Controlled Group or as to which Borrower or any current or past member of its
Controlled Group otherwise has or could have any liability.
"EMPLOYMENT AGREEMENTS" shall mean those certain employment agreements
between Borrower and each of R. Xxxxxxx Xxxxxx and Xxxxx Xxxxxxx.
"ENVIRONMENTAL LAWS" means any and all applicable federal, state or
local laws, statutes, common law, policies, ordinances, codes, rules,
regulations, orders, decrees, directives and standards or relating to the
protection of health, safety or the environment, or to the regulation of
Hazardous Material, including, but not limited to, the following statutes as now
written and amended and as amended hereafter: the Federal Water Pollution
Control Act, 33 U.S.C. Section 1251 et seq., the Clear Air Act, 42 U.S.C.
Section 7401 et. seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601
et set., the Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.,
the Solid Waste Disposal Act, 42 U.S.C. Section 6901 et seq., the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Section 11001 et seq., and the Safe Drinking Water Act, 42 U.S.C. Section
3OOf et seq.
7
"EQUIPMENT" shall mean all of Borrower's machinery, equipment and
furniture of every kind and nature, trade fixtures and fixtures not forming a
part of real property, all whether now owned or hereafter acquired, and wherever
situated, together with all appurtenances, additions and accessions thereto,
replacements therefor, all parts therefor, all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with
respect thereto, and all products and proceeds thereof and condemnation awards
and insurance proceeds with respect thereto.
"EQUITY INTERESTS" shall mean the capital stock of any class of
Borrower and options, warrants and other rights to acquire capital stock or
other equity interests of Borrower.
"EQUITY SALE" shall mean any issuance, sale, give away, conveyance,
transfer or other disposition of any Equity Interests by Borrower or any other
change in the capital structure of Borrower.
"EQUITY SALE PROCEEDS" shall mean the aggregate cash proceeds paid or
payable to Borrower in connection with any Equity Sale, after deduction of all
documented fees, costs and expenses paid to any third party in connection with
such Equity Sale.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EVENT OF DEFAULT" shall mean any of the events or conditions
described in SECTION 13.1.
"EXCESS CASH FLOW" - see SECTION 2.5(b).
"EXCESS CASH FLOW PAYMENT" - see SECTION 2.5(b).
"FEDERAL FUNDS RATE" shall mean, for any period, a fluctuating
interest rate per annum equal, for each day during such period, to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day that is a Business Day, the average of the quotations for such day
on such transactions received by Agent or any Lender from three Federal Funds
brokers of recognized standing selected by it, or if any such quotations are not
received, as reasonably determined by Agent.
"FEE LETTER" - see SECTION 5.2.
"FINAL MATURITY DATE" shall mean June 15, 2004.
"FINANCIALS" - see SECTION 10.3(a).
8
"FISCAL QUARTER" shall mean each of Borrower's and its Subsidiaries'
fiscal quarters for financial accounting purposes, which ends on the last day of
March, June, September and December, respectively.
"FISCAL YEAR" shall mean Borrower's and its Subsidiaries' fiscal year
for financial accounting purposes, each of which ends on the last day of
December.
"FIXED CHARGE COVERAGE RATIO" shall mean, for any period, the ratio
for such period of (a) an amount equal to (i) EBITDA for such period, less (ii)
Net Capital Expenditures incurred during such period, less (iii) cash income
taxes for such period, to (b) Total Fixed Charges for such period, all as
determined for Borrower and its Subsidiaries on a consolidated basis in
accordance with GAAP.
"FIXTURES" shall mean all "fixtures" as such term is defined in the
UCC, now owned or hereafter acquired by Borrower, wherever located.
"FORCE MAJEURE" shall mean acts of God, acts of public enemies,
insurrections, riots, civil disturbances, strikes, boycotts, other direct
consequences of a labor dispute, other industrial disturbances, fires,
explosions, floods, epidemics, quarantine restrictions, shortages of materials,
equipment or transportation, freight embargoes, power or utility failures,
orders or acts, or failures to act, of civil or military authority or other
similar causes beyond the control of Borrower.
"FSFP" shall mean First Source Financial LLP, an Illinois registered
limited liability partnership.
"FUNDING DATE" shall mean the date of funding of a Loan and each
continuation or conversion of Prime Rate Loans and LIBOR Rate Loans or issuance
of a Letter of Credit or a LC Guaranty therefor, which date in all cases shall
be a Business Day.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time (consistently applied
with those used in preparation of Borrower's audited financial statements for
the Fiscal Year ending December 31, 1998).
"GENERAL INTANGIBLES" shall mean all of Borrower's presently owned or
hereafter acquired general intangibles, including Intellectual Property,
goodwill, choses in action, causes of action, franchises, customer lists,
contract rights, confidential information, employment agreements, engineering
contracts, leasehold interests in real and personal property, insurance policies
(including business interruption insurance), licenses, permits, and such other
Property which uniquely reflect the goodwill of the business of Borrower;
deposit accounts, letters of credit, and General Intangibles relating to other
items of Collateral, including rights to refunds or indemnification;
reversionary or other rights of Borrower to excess Employee Benefit Plan assets
upon termination or amendment thereof and proceeds of all of the foregoing,
including insurance proceeds, including proceeds of
9
business interruption insurance, income tax refunds, and claims for tax or
other refunds against any Governmental Authority.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government or any
other political subdivision thereof, any state or other political subdivision
thereof and any agency, authority, court, central bank, instrumentality,
department or other law, regulation or rulemaking entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government.
"GROSS CAPITAL EXPENDITURES" shall mean, for any period, the total of
all expenditures incurred by Borrower or any Subsidiary in respect of the
purchase or other acquisition of fixed or capital assets during such period,
without any deduction for trade-ins, salvage values, resales or similar
recoveries, including the amount which, in accordance with GAAP, is or should be
initially posted to Borrower's or such Subsidiary's balance sheet with respect
to leases entered into during such period which have been, or, in accordance
with GAAP, should be, recorded as Capitalized Leases.
"GROUP" shall mean any Person or group or related Persons who would be
treated as a group under Section 13(d) of the Security Exchange Act of 1934, as
amended.
"HAZARDOUS MATERIAL" shall mean: (a) any "hazardous substance" as now
defined pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C.A. Section 9601(14), as amended by the
Superfund Amendments and Reauthorization Act ("XXXX"), and including any
judicial interpretations thereof; (b) any "pollutant or contaminant" as defined
in 42 U.S.C.A. Section 9601(33); (c) any material now defined as "hazardous
waste" pursuant to 40 C.F.R. Part 261; (d) any petroleum, including crude oil
and any fraction thereof; (e) natural gas, natural gas liquids, liquefied
natural gas, or synthetic gas usable for fuel; (f) any "hazardous chemical" as
defined pursuant to 29 C.F.R. Part 1910; (g) any asbestos, polychlorinated
biphenyl (PCB), or isomer of dioxin, or any material or thing containing or
composed of such substance or substances; and (h) any other substance,
regardless of physical form, that is subject to any past, present or future
(provided, however, any representation or warranty set forth herein shall be
deemed to relate only to statutes, rules and regulations in effect at the time
such representation or warranty was made or deemed to be made) Federal, state or
local governmental statute, rule or regulation relating to the protection of
human health, plant life, animal life, natural resources, property or the
reasonable enjoyment of life or property from the presence in the environment of
any solid, liquid, gas, odor or any form of energy, from whatever source.
"HZ SUB" shall mean XxxxxxXxxx.xxx, a California corporation.
"INDEBTEDNESS" of a Person shall mean, without duplication, (a)
indebtedness for borrowed money or for the deferred purchase price of property
or services (other than deferred and accrued compensation to employees and trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), whether on open account or evidenced by a
10
note, bond, debenture or similar instrument, (b) obligations under Capitalized
Leases, (c) reimbursement obligations for letters of credit, banker's
acceptances or other credit accommodations, whether drawn or undrawn, (d)
liabilities, as determined by Agent, under any interest rate agreement, (e)
Contingent Obligations and (f) Indebtedness secured by any Lien on any property
of that Person, even if that Person has not assumed such Indebtedness.
"INDEBTEDNESS TO BE REFINANCED" - see SECTION 12.1(i)
"INSTRUMENT" of a Person shall mean any "instrument," as such term is
defined in the UCC, now owned or hereafter acquired by such Person, wherever
located, other than instruments that constitute, or are a part of a group of
writings that constitute, Chattel Paper.
"INTANGIBLE ASSETS" shall mean licenses, franchises, patents, patent
applications, trademarks, trademark applications, trade names, copyrights,
copyright applications, computer software rights, goodwill and research and
development expense or other intangibles shown on the consolidated balance sheet
of Borrower and its Subsidiaries.
"INTELLECTUAL PROPERTY" of a Person shall mean all of such Person's
present and future designs, patents, patent rights and applications therefor,
technology, trademarks and registrations or applications therefor, service
marks, trade names, inventions, copyrights and all applications and
registrations therefor, advertising matter, software or computer programs,
license rights, trade secrets, methods, processes, logos, knowhow, drawings,
specifications, descriptions and licenses with respect thereto, and all
memoranda, notes, and records with respect to any research and development,
whether now owned or hereafter acquired by such Person, and proceeds of all of
the foregoing, including proceeds of insurance policies thereon.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" shall mean that certain
Collateral Patent, Trademark, Copyright and License Assignment dated as of even
date herewith, duly executed and delivered by Borrower and its Subsidiaries in
favor of Agent with respect to Intellectual Property.
"INTEREST COVERAGE RATIO" shall mean, for any period, the ratio for
such period of (a) EBITDA for such period to (b) Interest Expense for such
period, all as determined for Borrower and its Subsidiaries on a consolidated
basis in accordance with GAAP.
"INTEREST EXPENSE" shall mean, for any period, the gross interest
expense accrued or paid by Borrower and its Subsidiaries during such period,
determined on a consolidated basis in accordance with GAAP. For the purposes of
the foregoing, gross interest expense shall be determined after giving effect to
any net payments made or received by Borrower or any such Subsidiary with
respect to interest rate protection agreements.
"INTEREST PERIOD" shall mean with respect to any LIBOR Rate Loan, a
period of one, three or six months commencing on a Business Day selected by
Borrower pursuant to this Agreement. Each such Interest Period shall end on
(but exclude) the date which numerically
11
corresponds to such date one, three or six months thereafter, PROVIDED,
HOWEVER, that if there is no such numerically corresponding day in such next,
third or sixth succeeding month, such Interest Period shall end on the first
Business Day of the month next succeeding such next, third or sixth
succeeding month. If any Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next succeeding
Business Day.
"INVENTORY" of a Person shall mean all of the inventory of such Person
of every kind and description, now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of such Person, wherever located,
including all merchandise, raw materials, parts, supplies, work-in-process and
finished goods intended for sale, together with all the containers, packing,
packaging, shipping and similar materials related thereto, and including such
inventory as is temporarily out of such Person's custody or possession,
including inventory on the premises of other Persons and items in transit, and
including any goods reclaimed, returned or repossessed upon any Accounts,
Documents, Instruments or Chattel Paper relating to or arising from the sale of
inventory, and all substitutions and replacements therefor, and all additions
and accessions thereto, and all ledgers, books of account, records, computer
printouts, computer runs, microfilm, microfiche and other computer-prepared
information relating to any of the foregoing, and any and all proceeds of any of
the foregoing, including proceeds of insurance policies thereon.
"INVESTMENT PROPERTY" of a Person shall have the meaning ascribed
thereto in Section 9-115 of the UCC in those jurisdictions in which such
definition has been adopted and shall include (a) all securities, whether
certificated or uncertificated, including stocks, bonds, interests in limited
liability companies, partnership interests, treasuries, certificates of deposit,
and mutual fund shares; (b) all securities entitlements of such Person,
including the rights of such Person to any securities account and the financial
assets held by a securities intermediary in such securities account and any free
credit balance or other money owing by any securities intermediary with respect
to that account; (c) all securities accounts held by such Person; (d) all
commodity contracts held by such Person; and (e) all commodity accounts held by
such Person.
"ISSUING BANK" shall mean any bank or financial institution selected
by Borrower (which may be a Lender) which is approved by Agent and which issues
one or more Letters of Credit for the account of Borrower as to which Agent or
Lenders have issued an LC Guaranty.
"ISSUING BANK FEES" - see SECTION 5.4(b).
"LC EXPOSURE" shall mean, at any time, the sum of (a) the then
aggregate amount of outstanding Reimbursement Obligations PLUS (b) any portion
of the Cap Amount at such time not represented by Reimbursement Obligations
comprised of outstanding Letters of Credit.
"LC GUARANTY" shall mean any document, instrument or agreement
pursuant to which Agent or Lenders request or apply for the issuance of a Letter
of Credit at Borrower's request or Agent or Lenders assure an Issuing Bank of
Borrower's payment or performance of some or all of its obligations in
connection with such Letter of Credit (including without limitation any
obligations
12
of reimbursement), which term shall include (a) any reimbursement agreement
or application entered into by Agent or Lenders (whether with or without
Borrower as a co-signer, joint or primary obligor or otherwise), or any
guaranty entered into by Agent or Lenders, and (b) this Agreement if a Lender
is the Issuing Bank.
"LC GUARANTY REQUEST" - see SECTION 12.2(c).
"LC LIABILITY" shall mean, as to each LC Guaranty, all liabilities of
Lenders with respect to each LC Guaranty or the transaction for which any Letter
of Credit was issued, whether contingent or otherwise, including: (a) the amount
available to be drawn or which may become available to be drawn on a Letter of
Credit; (b) all amounts which have been paid or made available by the Issuing
Bank or Lenders to the extent not reimbursed by Borrower; and (c) all unpaid
interest, fees and expenses with respect thereto.
"LEASE OBLIGATIONS" shall mean, at any date, the rental commitments of
Borrower under leases for real and/or personal property (including taxes,
insurance, maintenance and similar expenses which Borrower is obligated to pay
under the terms of said leases) on such date, whether or not such obligations
are reflected as liabilities or commitments on a balance sheet of Borrower or in
the notes thereto, excluding, however, Capitalized Lease Obligations.
"LENDERS" shall mean, collectively, FSFP and all other financial
institutions parties to this Agreement, together with their respective
successors and permitted assigns pursuant to SECTION 15.1, and "LENDER" shall
mean any of such Persons.
"LENDER PARTY" - see SECTION 14.5.
"LETTER OF CREDIT" shall mean a letter of credit issued by an Issuing
Bank for the account of Borrower as to which Agent or Lenders have issued an LC
Guaranty.
"LETTER OF CREDIT COMMITMENT" - see SECTION 2.1(c).
"LEVEL I STATUS" exists at any date if: (i) as of the last day of the
Fiscal Quarter of Borrower referred to in the most recent annual or quarterly
financial statements of Borrower delivered pursuant to SECTION 11.1, the Debt to
EBITDA Ratio is equal to or greater than 2.50 to 1.00, and (ii) the outstanding
balance of the Designated Account on the date hereof has not been paid in full
in cash to Borrower.
"LEVEL II STATUS" exists at any date if:(i) as of the last day of the
Fiscal Quarter of Borrower referred to in the most recent annual or quarterly
financial statements of Borrower delivered pursuant to SECTION 11.1, the Debt to
EBITDA Ratio is equal to or greater than 2.50 to 1.00 and (ii) the outstanding
balance of the Designated Account on the date hereof has been paid in full in
cash to Borrower.
13
"LEVEL III STATUS" exists at any date if, as of the last day of the
Fiscal Quarter of Borrower referred to in the most recent annual or quarterly
financial statements of Borrower delivered pursuant to SECTION 11.1, the Debt to
EBITDA Ratio is equal to or greater than 2.00 to 1.00, but less than 2.50 to
1.00.
"LEVEL IV STATUS" exists at any date if, as of the last day of the
Fiscal Quarter of Borrower referred to in the most recent annual or quarterly
financial statements of Borrower delivered pursuant to SECTION 11.1, the Debt to
EBITDA Ratio is equal to or greater than 1.75 to 1.00, but less than 2.00 to
1.00.
"LEVEL V STATUS" exists at any date if, as of the last day of the
Fiscal Quarter of Borrower referred to in the most recent annual or quarterly
financial statements of Borrower delivered pursuant to SECTION 11.1, the Debt to
EBITDA Ratio is less than 1.75 to 1.00.
"LIABILITIES" shall mean all of the following, in each case howsoever
created, arising or evidenced, whether direct or indirect, joint or several,
absolute or contingent, or now or hereafter existing or arising, or due or to
become due: (a) all liabilities, obligations and indebtedness of Borrower and
its successors and assigns to any one or more of Agent and Lenders under or in
connection with this Agreement, any Note, any Letter of Credit, any LC Guaranty
or any of the other Related Documents, (b) all other liabilities, obligations
and indebtedness of Borrower to any one or more of Agent and Lenders, whether or
not arising out of or in connection with this Agreement, any Note, or the
Related Documents, and (c) all other obligations of Borrower or its successors
and assigns to any one or more of Agent and Lenders in connection with the
Related Transactions.
"LIBOR INTEREST PAYMENT DATE" shall mean, with respect to any LIBOR
Rate Loan, the last day of each Interest Period applicable thereto, and, in
addition, with respect to any Interest Period of greater than three months, the
date which numerically corresponds to such date three months after the first day
of such Interest Period; PROVIDED, HOWEVER, that if there is no such numerically
corresponding day in such third succeeding month or such day is not a Business
Day, then the first Business Day of the month next succeeding such third
succeeding month.
"LIBOR INTEREST RATE DETERMINATION DATE" shall mean each date of
determining the LIBOR Rate with respect to an Interest Period which date shall
be the first Business Day prior to the first day of the applicable Interest
Period for any LIBOR Rate Loan.
"LIBOR RATE" shall mean, for any Interest Period, an interest rate per
annum obtained by dividing (a) the rate of interest published in THE WALL STREET
JOURNAL on the LIBOR Interest Rate Determination Date in the column captioned
"Money Rates" under the heading "London Interbank Offered Rates (LIBOR)", with
respect to a time period equal to such Interest Period, by (b) a percentage
equal to 100% MINUS the LIBOR Reserve Percentage, if any, in effect on the
applicable LIBOR Interest Rate Determination Date; PROVIDED, HOWEVER, that if
such publication is not available or such rate is not set forth therein, the
LIBOR Rate shall be determined on the basis of any other source determined by
Agent in its reasonable discretion. The LIBOR Rate
14
shall be adjusted to the nearest one-sixteenth percent (1/16%) or, if there
is no nearest one-sixteenth percent (1/16%), to the next higher one-sixteenth
percent (1/16%).
"LIBOR RATE LOANS" shall mean, collectively, LIBOR Rate Term Loans and
LIBOR Rate Revolving Loans.
"LIBOR RATE REVOLVING LOAN" shall mean a Revolving Loan which bears
interest for a specific Interest Period based on the LIBOR Rate.
"LIBOR RATE REVOLVING MARGIN" shall mean the per annum interest rate
margin from time to time in effect and payable in addition to the LIBOR Rate
applicable to the LIBOR Rate Revolving Loans, as determined in accordance with
SECTION 4.1
"LIBOR RATE TERM LOAN" shall mean that portion of a Term Loan which
bears interest for a specific Interest Period based on the LIBOR Rate.
"LIBOR RATE TERM MARGIN" shall mean the per annum interest rate margin
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the LIBOR Rate Term Loans, as determined in accordance with SECTION 4.1
"LIBOR RESERVE PERCENTAGE" shall mean, for any day, the aggregate of
the rates (expressed as a decimal) of any reserve requirements current on such
day (including, without limitation, basic, supplemental, marginal and emergency
reserves) under any regulation promulgated by the Board of Governors of the
Federal Reserve System (or any successor thereto) as in effect from time to time
dealing with reserve requirements prescribed for eurocurrency funding, including
any reserve requirements with respect to "eurocurrency liabilities" under
Regulation D of the Board of Governors of the Federal Reserve System.
"LIEN" shall mean, when used with respect to any Person, any interest
in any real or personal property, asset or other right held, owned or being
purchased or acquired by such Person which secures payment or performance of any
obligation and shall include any security interest, mortgage, lien, pledge,
encumbrance, charge, retained security title of a conditional vendor or lessor,
or other security interest of any kind, whether arising under a security
agreement, mortgage, deed of trust, chattel mortgage, assignment, pledge,
retention of security title, financing or similar statement or notice or arising
as a matter of law, judicial process or otherwise.
"LOAN ACCOUNT" - see SECTION 2.13.
"LOANS" shall mean, collectively, all Revolving Loans and Term Loans,
and "LOAN" shall mean any thereof.
"LOCKBOX" - see SECTION 6.2(a).
15
"LOSS PROPERTY" - see SECTION 7.6.
"LOSS PROCEEDS" - see SECTION 7.6.
"MANAGER" shall mean First Source Financial, Inc., a Delaware
corporation, and its successors and assigns, as manager of FSFP.
"MASTER ACCOUNT" - see SECTION 6.2(a).
"MASTER ACCOUNT BANK" shall mean each bank and other entity serving in
the capacity of agent for Agent under the Bank Agency Agreement (including any
successor Bank Agency Agreement). Initially the Master Account Bank shall mean
LaSalle National Bank.
"MASTER ACCOUNT COLLECTED BALANCES" - see SECTION 7.2.
"MASTER AGENT" - see SECTION 14.23.
"MATERIAL ADVERSE EFFECT" shall mean (a) a material adverse effect on
the financial condition, operations, assets or business of Borrower or of
Borrower and its Subsidiaries taken as a whole, (b) a material impairment of the
ability of Borrower or any Subsidiary to perform its obligations in connection
with this Agreement or any of the other Related Documents to which it is a
party, (c) a material adverse effect on Agent's Lien priority in, or the value
of, the Collateral, or (d) a material adverse effect on the validity or
enforceability of any of the Related Documents or the rights, powers and
remedies of Agent or any Lender to enforce or collect any of the Liabilities.
"MATERIAL CONTRACT" - see SECTION 10.6.
"MATERIAL INTELLECTUAL PROPERTY RIGHT" - see SECTION 10.14.
"MULTIEMPLOYER PLAN" shall mean any "multiemployer plan" within the
meaning of Section 3(37) or 4001(a)(3) of ERISA to which Borrower or a current
or past member of its Controlled Group is making or has made contributions to or
as to which Borrower or any current or past member of its Controlled Group
otherwise has or could have any liability.
"NET CAPITAL EXPENDITURES" shall mean for any period Gross Capital
Expenditures for such period, MINUS proceeds from Permitted Purchase Money Debt
for such period used to finance Gross Capital Expenditures, MINUS the net cash
proceeds from the sale or trade-in of Equipment replaced by comparable Equipment
within 90 days of such sale or trade-in.
"NET INCOME" shall mean, for any period, net income or loss of
Borrower and its Subsidiaries as it would appear on an income statement of
Borrower and its Subsidiaries for such period prepared on a consolidated basis
in accordance with GAAP.
16
"NET WORTH" shall mean the net worth of Borrower and its Subsidiaries
as it would appear on a consolidated balance sheet of Borrower prepared on a
consolidated basis in accordance with GAAP.
"NON-USE FEE" - see SECTION 5.1.
"NOTE" and "NOTES" shall mean the Term Notes and the Revolving Notes,
or any of them.
"NOTICE OF LIBOR ACTIVITY" - see SECTION 2.3(b).
"OPERATING ACCOUNTS" - see SECTION 6.2(b).
"ORGANIZATION DOCUMENTS" of a Person shall mean, as applicable, the
articles of incorporation, articles of organization, operating agreement,
bylaws, partnerships agreement and all other organization documents of such
Person.
"PAYMENT DATE" - see SECTION 2.5(b).
"PBGC" shall mean Pension Benefit Guaranty Corporation, and any entity
succeeding to any or all of its functions under ERISA.
"PENSION PLAN" shall mean any "employee pension benefit plan", as such
term is defined in Section 3(2) of ERISA (other than a Multiemployer Plan),
which is (a) subject to Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code or Section 302 of ERISA and (b) is or
has been maintained by Borrower or a current or past member of its Controlled
Group, or as to which Borrower or any member of its Controlled Group otherwise
has or could have any liability.
"PERMITTED HZ DISPOSITION" shall mean the spin-off of HZ Sub to the
shareholders of Borrower or any other disposition of the capital stock of HZ
Sub, in one or more transactions to one or more of Borrower's shareholders;
provided that any actual or potential liability, taxes, Indebtedness or expense
to Borrower arising from any such spin-off or disposition shall not have a
Material Adverse Effect and shall not have a maximum aggregate actual or
potential liability (including tax liability), expense or Indebtedness to
Borrower of more than $100,000.
"PERMITTED LC" shall mean a Letter of Credit issued with Agent's prior
written consent; PROVIDED, HOWEVER, that (a) each such Letter of Credit shall
expire pursuant to its terms on or before the Revolving Loan Termination Date,
(b) at no time shall Total Revolving and LC Exposure exceed the lesser of the
amount of the Revolving Commitment in effect or the Borrowing Base at such time,
(c) Borrower's reimbursement obligations with respect to each such Letter of
Credit shall be secured by an LC Guaranty and (d) Agent and the respective
Issuing Bank shall have
17
agreed in writing that the Relevant Cap for such LC Guaranty shall be
increased by an amount equal to the stated amount of such Letter of Credit.
"PERMITTED LIENS" shall mean any of the following Liens: (a) Liens in
favor of Agent, granted pursuant to the Collateral Documents; (b) Liens (i) in
connection with the acquisition of fixed assets after the date hereof and
attaching only to the Property being acquired, if the Indebtedness secured
thereby is incurred in connection with the acquisition and does not exceed one
hundred percent (100%) of the fair market value of such Property at the time of
acquisition thereof; and (ii) Liens on property being leased pursuant to leases
which are Capitalized Lease Obligations permitted under this Agreement, provided
that the aggregate outstanding amount of all such Indebtedness and Capitalized
Lease Obligations described in the preceding clauses (i) and (ii) does not at
any time exceed $500,000; (c) Liens for current taxes or other governmental
charges or levies which are not delinquent or are being contested in good faith
and by appropriate proceedings, and with respect to which adequate reserves have
been established, and are being maintained, in accordance with GAAP; (d)
mechanic's, worker's, materialmen's, warehousemen's and other like Liens arising
in the ordinary course of business in respect of obligations which are not
delinquent or which are being contested in good faith and by appropriate
proceedings, and with respect to which adequate reserves have been established,
and are being maintained, in accordance with GAAP; (e) Liens arising in the
ordinary course of business for sums being contested in good faith and by
appropriate proceedings, and with respect to which adequate reserves have been
established, and are being maintained, in accordance with GAAP, or for sums not
due, and in any case not involving any deposits or advances for borrowed money
or the deferred purchase price of Property or services; (f) zoning ordinances,
easements, licenses, reservations, covenants, conditions or restrictions on the
use of real property which, in Agent's reasonable determination, are not
violated by existing uses or improvements, do not in the aggregate interfere
with the use of the related real property and do not adversely affect the
marketability of the title to the related real property; (g) Liens incurred in
the ordinary course of business in connection with worker's
compensation,unemployment insurance or other forms of governmental insurance or
benefits; and (h) Liens shown on SCHEDULE 10.5.
"PERMITTED PURCHASE MONEY DEBT" - see SECTION 11.21.
"PERSON" shall mean any natural person, corporation, firm,
partnership, limited liability company, limited liability partnership, firm,
trust, association, government, governmental agency, Employee Benefit Plan or
other entity, whether acting in an individual, fiduciary or other capacity.
"PHYSICAL INVENTORY" - see SECTION 11.28.
"PRIME RATE" shall mean the highest "prime rate" of interest reported,
from time to time, by THE WALL STREET JOURNAL; PROVIDED, HOWEVER, that in the
event that THE WALL STREET JOURNAL ceases reporting a "prime rate", the "Prime
Rate" shall be determined from a comparable index chosen by Agent in good faith.
The "Prime Rate" shall change effective on the date of the publication of any
change in the applicable index by which such "Prime Rate" is determined.
18
"PRIME RATE LOANS" shall mean Loans or the portion thereof which bear
interest determined by reference to the Prime Rate.
"PRIME RATE REVOLVING LOAN" shall mean a Revolving Loan which bears
interest based on Prime Rate.
"PRIME RATE REVOLVING MARGIN" shall mean the per annum interest rate
margin from time to time in effect and payable in addition to the Prime Rate
applicable to the Prime Rate Revolving Loans, as determined by reference to
SECTION 4.1.
"PRIME RATE TERM LOAN" shall mean that portion of a Term Loan which
bears interest based on the Prime Rate.
"PRIME RATE TERM MARGIN" shall mean the per annum interest rate margin
from time to time in effect and payable in addition to the Prime Rate applicable
to the Prime Rate Term Loans, as determined by reference to SECTION 4.1.
"PRO RATA SHARE" shall mean, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the amount of all of the
Commitments.
"PROPERTY" of a Person shall mean all types of real, personal or mixed
property and all types of tangible or intangible property of such Person.
"REAL ESTATE" of a Person shall mean the real property, mineral
rights, leasehold or other interests in real property together with any purchase
options and other rights related to such leaseholds or other interests owned,
leased, used or operated now or hereafter by such Person, all Fixtures and
personal property used in conjunction therewith and such Person's rights to
leases, rents and profits with respect thereto.
"REIMBURSEMENT OBLIGATIONS" shall mean, at any time, the sum of (a)
the aggregate undrawn amount of all Letters of Credit outstanding at such time,
PLUS (b) the aggregate amount of all drawings under Letters of Credit for which
the Issuing Bank has not at such time been reimbursed (either by Borrower, Agent
or Lenders), PLUS (c) the aggregate amount of all payments made by each Lender
to the Issuing Bank with respect to such Lender's participation in Letters of
Credit as provided in SECTION 2.12 for which Borrower has not at such time
reimbursed Lenders, whether by way of a Revolving Loan or otherwise.
"RELATED DOCUMENTS" shall mean, collectively, the Notes, this
Agreement, and the Collateral Documents, in each case as the same may be
amended, modified or supplemented from time to time pursuant to the terms hereof
or thereof.
19
"RELATED TRANSACTIONS" shall mean all transactions contemplated by
this Agreement and the Related Documents, including, without limitation, the
Loans and the granting by Borrower of Liens on the Collateral to secure the
Liabilities.
"REPORTABLE EVENT" shall have the meaning given to such term under
Section 4043 of ERISA or the regulations issued thereunder.
"REQUIRED LENDERS" shall mean Lenders having fifty and one tenth of
one percent (50.1%) or more of the total Commitments then in effect.
"REQUIREMENT OF LAW" for any Person shall mean the corporate charter
and by-laws or other organizational or governing documents of such Person, and
any law, treaty, rule, ordinance or regulation or determination of an arbitrator
or a court or other governmental authority, in each case applicable to or
binding upon such Person or any of its property or to which such Person or any
of its Property is subject.
"REVOLVING COMMITMENT" - see SECTION 2.1(b).
"REVOLVING LOANS" - see SECTION 2.1(b).
"REVOLVING LOAN TERMINATION DATE" - see SECTION 2.1(b).
"REVOLVING NOTES" - see SECTION 3.2.
"SECURITY AGREEMENT" - see SECTION 9.6.
"SETTLEMENT DATE" - see SECTION 2.3(e).
"SOLVENCY AFFIDAVIT" shall mean the Affidavit of Solvency, dated as of
the Closing Date, executed and delivered by the chief financial officer of
Borrower in favor of Lenders.
"SOLVENT" with respect to any Person on any date of determination
(and, as applied to Borrower, after taking into account the consummation on the
Closing Date of the Related Transactions), shall mean that (a) the fair saleable
value of such Person's Property is in excess of the total amount of the present
value of its Liabilities (including for purposes of this definition all
liabilities, whether or not reflected on a balance sheet prepared in accordance
with GAAP, and whether direct or indirect, fixed or contingent, liquidated or
unliquidated, secured or unsecured, disputed or undisputed), (b) such Person is
able to pay its debts or obligations in the ordinary course as they mature, and
(c) such Person has capital sufficient to carry on its business as conducted and
as proposed to be conducted. In computing the amount of contingent,
unliquidated or disputed liabilities at any time, such liabilities will be
computed at the amount which, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability. "SOLVENCY" shall have a correlative
meaning.
20
"STATED AMOUNT" shall mean, with respect to any Permitted LC and as of
any date of determination, the maximum amount for which a draw or a demand for
payment may then be made thereunder, whether or not such maximum amount is
defined therein as the "Stated Amount" thereof.
"STATUS" means either Level I Status, Level II Status, Level III
Status, Level IV Status or Level V Status.
"STOCK PLEDGE AGREEMENT" - see SECTION 9.6.
"SUBSIDIARY" shall mean, with respect to any Person (herein referred
to as the "parent"), any corporation, association or other business entity
(whether now existing or hereafter organized) of which at least a majority of
the securities or other ownership interests having ordinary voting power for the
election of directors (or their equivalent under the laws of the jurisdiction of
organization of such person) is, at the time any determination is being made,
owned or controlled by the parent or one or more subsidiaries of the parent or
by parent and one or more subsidiaries of the parent. Unless otherwise
expressly provided or the context requires otherwise, all references herein to a
"Subsidiary" shall mean a direct or indirect Subsidiary of Borrower.
"TERM LOANS" - see SECTION 2.1(a).
"TERM COMMITMENT" - see SECTION 2.1(a).
"TERM NOTES" - see SECTION 3.1.
"TEST COUNT RESERVE" shall mean 5% of the book value of the then
existing Eligible Inventory (the book value of Eligible Inventory to be
determined at the lower of cost (determined on a first-in, first-out ("FIFO")
basis) or market) of Borrower; provided that such Test Count Reserve shall be
adjusted by Agent at its discretion, based upon the results of future field
examinations of Borrower's inventory by Agent; further provided that such Test
Count Reserve shall be eliminated after Agent is satisfied, in its discretion,
that based upon such results of future field examinations there are no material
test count variances.
"TOTAL FIXED CHARGES" shall mean, for any period, the sum of (a) all
scheduled payments of cash interest or principal on account of Indebtedness of
Borrower and its Subsidiaries on a consolidated basis, including any and all
penalties, premiums, prepayment fees or the like thereon (including without
limitation any scheduled payments on the Term Loan, but excluding Excess Cash
Flow Payments) with respect to such period, PLUS (b) all cash amounts paid by
Borrower with respect to such period (i) to purchase, redeem or otherwise
acquire any of Borrower's Equity Interests, or (ii) in respect of the purchase
of or satisfaction of any principal installment or any Indebtedness of any
Affiliate of Borrower and its Subsidiaries on a consolidated basis. For
purposes of the foregoing, "scheduled payments" shall not include repayments of
Revolving Loans pursuant to SECTION 7.3.
21
"TOTAL REVOLVING AND LC EXPOSURE" shall mean, at any time, the sum of
(a) the LC Exposure, if any, at such time and (b) the then aggregate outstanding
principal amount of all Revolving Loans.
"UCC" - see SECTION 1.2.
"UNAPPLIED INSURANCE OR CONDEMNATION PROCEEDS" shall mean Loss
Proceeds which Agent may apply against the Liabilities in accordance with
SECTION 7.6.
"UNMATURED EVENT OF DEFAULT" shall mean any event or condition which
if it continues uncured will, with lapse of time or notice or lapse of time and
notice, constitute an Event of Default.
"WELFARE PLAN" shall mean any "employee welfare benefit plan", as such
term is defined in Section 3(1) of ERISA.
"WORKING CAPITAL" shall mean, at any date, the excess of Current
Assets over Current Liabilities as at said date.
SECTION 1.2 ACCOUNTING AND FINANCIAL DETERMINATIONS. Where the
character or amount of any asset or liability or item of income or expense is
required to be determined, or any accounting computation is required to be made,
for the purpose of this Agreement or the Related Documents, such determination
or calculation shall be made, to the extent applicable and except as otherwise
specified in this Agreement or such Related Document, in accordance with GAAP;
PROVIDED, HOWEVER, that if any change in generally accepted accounting
principles from those applied in the preparation of the financial statements
referred to in SECTION 10.3 is occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or required by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions), the
initial announcement of which change is made after the Closing Date, results in
a change in the method of calculation of financial covenants, standards or terms
found in SECTIONS 1 or 11, then the parties hereto agree to enter into good
faith negotiations in order to amend such provisions so as to reflect such
changes with the desired result that the criteria for evaluating Borrower's
financial condition shall be the same after such changes as if such changes had
not been made; and PROVIDED, FURTHER, that until such time as the parties hereto
agree upon such amendments, such financial covenants, standards and terms shall
be construed and calculated as though such change had not taken place. When
used herein, the term "financial statement" shall include the notes and
schedules thereto, if any. All other terms contained in this Agreement (and
which are not otherwise specifically defined herein) shall have the meanings
provided in Article 9 of the Uniform Commercial Code of the State of Illinois
(the "UCC") to the extent the same are used or defined therein. All
determinations of the book value of Inventory contemplated hereby shall be at
the lower of cost (on a first-in, first-out basis) or market.
22
SECTION 1.3 CROSS REFERENCES; HEADINGS; ETC. The words "hereof",
"herein" and "hereunder" and words of a similar import when used in this
Agreement or in any of the Related Documents shall refer to this Agreement or
such Related Document as a whole and not to any particular provision of this
Agreement or such Related Document. Section, Schedule and Exhibit references
contained in this Agreement are references to Sections, Schedules and Exhibits
in or to this Agreement unless otherwise specified. Any reference in any
Section or definition to any clause is, unless otherwise specified, to such
clause of such Section or definition. Any reference to any gender in this
Agreement or any of the Related Documents includes each other gender and any
singular number includes the plural number and vice versa. The various headings
in this Agreement and the Related Documents are inserted for convenience only
and shall not affect the meaning or interpretation of this Agreement or such
Related Document or any provision hereof or thereof.
SECTION 2 COMMITMENTS OF LENDERS; LOAN REQUESTS; REDUCTION OR
TERMINATION OF THE COMMITMENTS; PREPAYMENTS; MAKING OF PAYMENTS; SETOFF.
SECTION 2.1 COMMITMENTS. Subject to the terms and conditions of
this Agreement, each Lender agrees to, severally on its own behalf and not
jointly with any other Lender:
(a) TERM COMMITMENT. Make a loan to Borrower on the Closing Date in
the amount of such Lender's Pro Rata Share of $13,000,000 (each such loan is
herein called a "TERM LOAN" and all such loans are herein collectively called
the "TERM LOANS"). The foregoing commitment of Lenders is herein called the
"TERM COMMITMENT."
(b) REVOLVING COMMITMENT. Make loans to Borrower (each such loan is
herein called a "REVOLVING LOAN" and all such loans are herein collectively
called the "REVOLVING LOANS") on a revolving basis from time to time before June
15, 2004 (herein called the "REVOLVING LOAN TERMINATION DATE") in such amounts
as Borrower from time to time may request up to such Lender's Pro Rata Share of
$7,000,000 (the foregoing commitment of Lenders, as it may be reduced in
accordance with the terms hereof from time to time, is herein called the
"REVOLVING COMMITMENT"), less all reductions in the amount of the Revolving
Commitment pursuant to SECTION 2.6(a), PROVIDED, HOWEVER, that Lenders shall not
be required to make any Revolving Loan if, after giving effect to such Revolving
Loan, Total Revolving and LC Exposure would exceed the lesser of (i) the amount
of the Revolving Commitment then in effect or (ii) the Borrowing Base at such
time.
Agent reserves the right in its reasonable business judgment with
respect to the Borrowing Base, on at least ten (10) Business Days' prior written
notice to Borrower, to (i) adjust any eligibility criteria or establish new
eligibility criteria, (ii) modify the advance rates against Eligible Accounts
and Eligible Inventory and (iii) establish reserves against Borrowing
Availability.
(c) LETTER OF CREDIT COMMITMENT. To the extent of Borrowing
Availability, upon the request of Borrower, Agent may (on behalf of each Lender
according to such Lender's Pro Rata Share) issue or arrange for the issuance of
LC Guaranties or Letters of Credit for the account of
23
Borrower. Each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from Agent, without recourse,
representation or warranty, an individual participation interest equal to its
Pro Rata Share of the amount of such LC Guaranty and each draw paid by the
Issuing Bank under the Letter of Credit issued in connection therewith. Each
Lender's obligation to pay its Pro Rata Share of all draws under the Letters
of Credit issued in connection with each LC Guaranty shall be absolute,
unconditional and irrevocable and in each case shall be made without
counterclaim or set-off by such Lender and shall be made irrespective of
whether an Unmatured Event of Default or Event of Default shall have occurred
and be continuing at the time. The aggregate maximum amount of Letters of
Credit subject to LC Guaranties shall not at any time exceed $2,000,000. The
foregoing commitment of Lenders is herein called the "LETTER OF CREDIT
COMMITMENT."
SECTION 2.2 REVOLVING LOAN TERMINATION DATE. This Agreement shall
expire on the Revolving Loan Termination Date; PROVIDED that all of Lenders' and
Agent's rights and remedies under this Agreement shall survive such termination
until all of the Liabilities have been finally paid in full in cash. In
addition, this Agreement may be terminated as set forth in SECTION 13.2. Upon
the effective date of termination, all of the Liabilities shall become
immediately due and payable without notice or demand notwithstanding any terms
contained herein or in any Note to the contrary. Notwithstanding any
termination of this Agreement, until (i) all of the Liabilities except unmatured
contingent Liabilities (other than those Liabilities described in CLAUSES (ii)
and (iii) below) for which no claim has been asserted shall have been paid in
full in cash, (ii) each LC Guaranty shall have been terminated and (iii)
Borrower shall have provided to Agent security on terms reasonably satisfactory
to the Required Lenders with respect to any pending or overtly threatened action
against any Person which would entitle any Lender to make a claim against
Borrower for indemnification under SECTION 14.5, Borrower shall remain bound by
the terms of this Agreement and Agent shall be entitled to retain its Liens on
the Collateral.
SECTION 2.3 LOAN REQUESTS.
(a) With respect to borrowings consisting of Prime Rate Loans,
Borrower shall give notice to Agent of each proposed borrowing by 10:00 a.m.
Chicago time on the proposed Funding Date of such borrowing. Loans made on any
Funding Date shall be in an aggregate minimum amount of $95,000 and integral
multiples of $5,000 in excess thereof.
(b) With respect to borrowings consisting of LIBOR Rate Loans,
Borrower shall deliver to Agent written notice of each such proposed borrowing
substantially in the form set forth in EXHIBIT B (each a "Notice of LIBOR
Activity") by 10:00 a.m. Chicago time at least three (3) Business Days prior to,
but in any event no more than five (5) Business Days prior to, the proposed date
of such borrowing. LIBOR Rate Loans shall be in an aggregate minimum amount of
$100,000 and integral multiples of $100,000 in excess thereof (or in such other
amount as Agent shall permit as shall be evidenced by the making of such LIBOR
Rate Loan by Lenders).
24
(c) Each notice given pursuant to this SECTION 2.3 shall be
irrevocable and Borrower shall be bound to make a borrowing in accordance
therewith. Subject to receipt by Agent of the documents required under SECTION
12 with respect to a borrowing and the satisfaction of all other conditions
precedent to such borrowing set forth in this Agreement, on the requested
Funding Date, Lenders shall pay over their Pro Rata Share of such funds by wire
transfer to the Master Account (except that, with respect to the initial Loans,
disbursement shall be according to instructions to be agreed upon by Agent and
Borrower on or prior to the Closing Date). Such notice shall be in writing or
by Electronic Notice and, if by Electronic Notice, shall be confirmed in writing
on or before the fifteenth (15) Business Day of the first calendar month
following the date of such borrowing by delivery of a Borrowing Certificate to
Agent. Each such notice shall specify the date, amount and type of borrowing.
"ELECTRONIC NOTICE" shall mean notice sent via facsimile to Agent. No Lender
Party shall incur any liability to Borrower in acting upon any Electronic Notice
referred to above which such Lender Party believes in good faith to have been
given by a duly authorized officer or other persons authorized to borrow on
behalf of Borrower or for otherwise acting in good faith under this SECTION 2.3
and, upon funding of any Loans by a Lender in accordance with this Agreement
pursuant to any such Electronic Notice, Borrower shall have effected a Loan
hereunder.
(d) Except as provided in SECTION 2.3(e) (which provides for the
settlement by Agent of Revolving Loans made, and payments thereon on a weekly
basis at Agent's discretion to avoid daily settlements between Lenders), on or
prior to 11:00 a.m. (Chicago time) on each Business Day on which it is asked to
make an advance with respect to Loans, Agent shall advise each Lender by
telephone or facsimile transmission of the requested Funding Date, the amount of
such advance and the amount of such Lender's Pro Rata Share thereof. Each
Lender shall pay to Agent the amount of such Lender's Pro Rata Share of such
advance prior to 11:00 a.m. (Chicago time) on the proposed Funding Date. Except
as provided in SECTION 2.3(e) and provided that each Lender has made all
payments required to be made by it hereunder, on or prior to 11:00 a.m. (Chicago
time) on the next Business Day after receipt by Agent of any payments of
principal with respect to the Loans and interest, fees and other amounts with
respect to the Liabilities (the "DAILY SETTLEMENT DATE"), Agent shall pay to
each Lender the amount of such Lender's Pro Rata Share of such payments. If any
payment from any Lender to Agent or from Agent to any Lender is not, in fact,
made by the party from whom payment is due, the other party shall be entitled to
recover such corresponding amount on demand (which demand shall be promptly
made) together with interest thereon at the Federal Funds Rate, for each day
from the Funding Date or Daily Settlement Date on which such amount was due
until such amount is paid.
(e) Agent on behalf of Lenders may (but shall not be obligated to)
make Revolving Loans and receive and retain payments on the Revolving Loans in
accordance with this SECTION 2.3(e) without notice to, or settlement with,
Lenders; PROVIDED, Agent shall settle the amount of the Revolving Loans with
Lenders at least once a week as follows:
The amount of each Lender's Pro Rata Share of outstanding Revolving
Loans shall be computed weekly (or more frequently in Agent's discretion) and
shall be adjusted upward or
25
downward on the basis of the amount of outstanding Revolving Loans as of 3:00
p.m. Chicago time on the last Business Day of the period specified by Agent
(such date being referred to as the "SETTLEMENT DATE"). Agent shall deliver
to each of Lenders promptly after any Settlement Date a summary statement of
the amount of outstanding Revolving Loans for such period. Lenders shall
transfer to Agent, or, subject to SECTION 2.12.6, Agent shall transfer to
Lenders, such amounts as are necessary so that (after giving effect to all
such transfers) the amount of the Revolving Loans made by each Lender shall
be equal to such Lender's Pro Rata Share of the aggregate amount of the
Revolving Loans outstanding as of such Settlement Date. If the summary
statement is received by Lenders prior to 10:00 a.m. Chicago time on any
Business Day, each Lender shall make the transfers described above in
immediately available funds no later than 12:00 noon Chicago time on the day
such summary statement was received; and if such summary statement is
received by Lenders after 10:00 a.m. Chicago time on such day, each Lender
shall make such transfers no later than 12:00 noon Chicago time on the next
succeeding Business Day. The obligation of each of Lenders to transfer such
funds shall be irrevocable and unconditional and without recourse to or
warranty by Agent. Each of Agent and Lenders agree to xxxx their respective
books and records on the Settlement Date to show at all times the dollar
amount of their respective Pro Rata Shares of the outstanding Revolving
Loans. To the extent that the settlement described above shall not yet have
occurred, upon repayment of any part of the Revolving Loans by Borrower,
Agent may first apply such amounts repaid directly to the amounts made
available by Agent pursuant to this SECTION 2.3(e).
Because Agent on behalf of Lenders may be advancing and/or may be
repaid all or a portion of the Revolving Loans prior to the time when Lenders
will actually advance and/or be repaid all or a portion of Revolving Loans,
interest with respect to the Revolving Loans shall be allocated by Agent to each
Lender and Agent in accordance with the amount of the Revolving Loans actually
advanced by and repaid to each Lender and Agent and shall accrue from and
including the date such Revolving Loans are so advanced to but excluding the
date such Revolving Loans are either repaid by Borrower in accordance with
SECTION 7.3 or actually settled by the applicable Lender as described in this
SECTION 2.3(e).
SECTION 2.4 CERTAIN WAIVERS. Except for notices expressly required
to be given to Borrower by Agent or any Lender under this Agreement, Borrower
waives notice of the creation of any of the Liabilities and all other notices
whatsoever to Borrower with respect to the Liabilities.
SECTION 2.5 CERTAIN MANDATORY AND PERMITTED PREPAYMENTS OF THE
LOANS.
(a) The aggregate principal balance of the Term Loans shall be
payable to Agent, for the benefit of Lenders, in nineteen (19) quarterly
installments on the 15th day of January, April, July and October of each year,
commencing October 15, 1999, and one final installment on June 15, 2004, as
follows:
PAYMENT DATE (ALL DATES ARE INCLUSIVE) AMOUNT OF EACH INSTALLMENT
-------------------------------------- --------------------------
26
October 15, 1999 through July 15, 2002 $583,333
October 15, 2002 through April 15, 2004, and June 15, 2004 $750,000
; provided, however, the June 15, 2004 payment shall in any event be sufficient
to repay the outstanding principal balance of the Term Loans in full.
(b) In addition, on the date (each a "PAYMENT DATE") as to each
Fiscal Year of Borrower which is the earlier of one hundred and twenty (120)
days after the end of such Fiscal Year or ten (10) days after the date on which
Agent receives the Annual Report for such Fiscal Year, commencing with the first
such date with respect to a Fiscal Year ending after the date hereof, Borrower
shall make a payment (the "EXCESS CASH FLOW PAYMENT") of principal on the Term
Loans in addition to the other payments on the Term Loans required to be made
pursuant to this Agreement or the Term Notes in an amount equal to 50% of
"Excess Cash Flow" (as hereinafter defined) of Borrower for such Fiscal Year.
As used herein, the term "EXCESS CASH FLOW" shall mean EBITDA minus Total Fixed
Charges minus Net Capital Expenditures minus taxes paid or payable in cash plus
any decrease in Working Capital minus any increase in Working Capital. Each
Excess Cash Flow Payment shall be applied to reduce the remaining regularly
scheduled principal installments of the Term Loans in inverse order of their
maturity.
(c) Additionally, (i) upon receipt by Borrower of any Unapplied
Insurance or Condemnation Proceeds, the proceeds of key-man life insurance which
has been assigned to Agent, Asset Sale Proceeds or Debt Sale Proceeds, Borrower
shall make a mandatory prepayment of the Term Loans in the amount thereof,
subject to Agent's right to otherwise apply such payments after the occurrence
and during the continuance of an Event of Default; and (ii) upon receipt by
Borrower of any Equity Sale Proceeds, Borrower shall make a mandatory prepayment
of (subject to Agent's right to otherwise apply such payments after the
occurrence and during the continuance of an Event of Default):(X) the Revolving
Loans to the limited extent necessary to fully prepay all Revolving Loans or, if
less, in such amount so that Borrowing Availability after giving effect thereto
equals $3,000,000 and (Y) to the extent of any balance of any Equity Sale
Proceeds after the application to the Revolving Loans to the extent provided in
the preceding clause (X), the Term Loan; PROVIDED, HOWEVER, if at the time of
receipt of such Equity Sale Proceeds, no Event of Default has occurred and is
continuing and the Debt to EBITDA Ratio is less than 1.75 to 1.0 and greater
than or equal to 1.0 to 1.0 as of the last day of the Fiscal Quarter of Borrower
as to which Agent has received the financial statements of Borrower provided
pursuant to SECTION 11.1 then the amount of such mandatory prepayment on the
Term Loans shall be 50% of the amount of such Equity Sale Proceeds remaining
after application to the Revolving Loans pursuant to the preceding clause (X)
and, FURTHER, PROVIDED, HOWEVER, if such ratio is less than 1.0 to 1.0 then no
such prepayment on the Term Loans from Equity Sale Proceeds need be made. Each
such payment provided for in this SECTION 2.5(c) shall be accompanied by accrued
interest on such principal amount, and by amounts payable under SECTION 4.4(f),
if any. Each such payment on the Term Loans provided for in this SECTION 2.5(c)
shall be applied to reduce the remaining regularly scheduled principal
installments of the Term Loans in inverse order of their maturity.
27
(d) In addition to the mandatory repayments of the Term Loans under
CLAUSES (a), (b), and (c) above, Borrower may voluntarily from time to time on
at least five Business Days' prior written irrevocable notice to Agent prepay
the Term Loans in whole or in part. Each such voluntary prepayment of the Term
Loans, if in part, shall be in an aggregate amount of at least $500,000 and an
integral multiple of $100,000. Each such partial prepayment shall be applied to
reduce the remaining regularly scheduled principal installments of the Loan to
be prepaid pro rata. Each such payment shall be accompanied by accrued interest
on such principal amount, and amounts payable under SECTION 4.4(f), if any.
SECTION 2.6 VOLUNTARY PREPAYMENT OF REVOLVING LOANS; VOLUNTARY
REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT.
(a) Borrower may voluntarily from time to time on at least five
Business Days' prior written irrevocable notice to Agent permanently reduce the
Revolving Commitment in whole or in part. If in part, any such reduction to be
in an aggregate amount of at least $500,000 and an integral multiple of
$100,000.
(b) Without permanently reducing the Revolving Commitment as provided
in CLAUSE (a) above, Borrower may voluntarily from time to time on at least one
Business Days' prior written irrevocable notice to Agent prepay the Revolving
Loans in whole or in part. Each such voluntary prepayment of the Revolving
Loans, if in part, shall be in an aggregate amount of at least $500,000 and an
integral multiple of $100,000. Each such payment shall be accompanied by
accrued interest on such principal amount, and amounts payable under SECTION
4.4(F).
SECTION 2.7 MANDATORY PREPAYMENTS ON REVOLVING LOANS.
(a) Concurrently with each reduction (including any termination) of
the Revolving Commitment (whether pursuant to SECTION 2.6(a) or otherwise),
Borrower shall make a mandatory prepayment of Revolving Loans outstanding in the
amount, if any, by which (i) the Total Revolving and LC Exposure exceeds (ii)
the then reduced amount of the Revolving Commitment. In addition, if at any
time (x) the Total Revolving and LC Exposure shall exceed (y) the Borrowing
Base, Borrower shall make a mandatory prepayment of the Revolving Loans in the
aggregate amount of such excess. Each such payment shall be accompanied by
accrued interest on such principal amount, and amounts payable under SECTION
4.4(f), if any.
(b) If at any time the aggregate Total Revolving and LC Exposure
exceeds the Borrowing Base, then Borrower immediately shall make a mandatory
prepayment of Revolving Loans outstanding in the aggregate amount of such excess
and each such payment shall be accompanied by accrued interest on such principal
amount and amounts payable under SECTION 4.4(f), if any. If any excess remains
after payment in full of the outstanding Revolving Loans, Borrower shall
immediately cash collateralize the LC Exposure in accordance with SECTION 13.2
to the extent necessary to eliminate such remaining excess.
28
SECTION 2.8 [Intentionally Omitted]
SECTION 2.9 MAKING OF PAYMENTS. All payments of principal of, or
interest on, the Notes and of all fees and other Liabilities shall be made by
Borrower to Agent in immediately available Dollars. All such payments shall be
made to Agent's Account No. 0000000 at LaSalle National Bank, ABA #000000000 (or
such other account as Agent may from time to time specify), not later than 11:30
a.m. Chicago time, on the date due; and funds received after that hour shall be
deemed to have been received by Agent on the next following Business Day.
Anything in this Agreement to the contrary notwithstanding, under no
circumstances shall receipt by Master Account Bank of funds of Borrower into the
Master Account or the holding of funds therein constitute repayment of Loans, or
entitle Borrower to interest thereon.
SECTION 2.10 DUE DATE EXTENSION. If any payment of principal,
interest or fees with respect to any of the Loans falls due on a Saturday,
Sunday or other day which is not a Business Day, then such due date shall be
extended to the next following Business Day, and additional interest and fees
shall accrue and be payable for the period of such extension.
SECTION 2.11 SET OFF AND SHARING OF PAYMENTS. In addition to any
rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, at any time (a) any payment or amount owing by
Borrower under or in connection with this Agreement or the Related Documents is
then due to any one or more of Agent and Lenders or any such holder of a Note,
and (b) upon the occurrence and during the continuance of any Event of Default,
Agent, each Lender, Master Account Bank (as agent of Agent and each Lender) and
each holder of any Note is hereby authorized by Borrower at any time or from
time to time, without notice to Borrower or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and to apply any
and all balances held by it at any of its offices for the account of Borrower
(regardless of whether such balances are then due to Borrower) and any other
property at any time held or owing by Agent, that Lender, Master Account Bank
(as agent of Agent and each Lender) or that holder to or for the credit or for
the account of Borrower against and on account of any of the Liabilities which
are not paid when due; PROVIDED that neither Agent nor any Lender shall exercise
any such right without giving prior written notice to Agent. Any Lender or
holder of any Note having a right to set off shall, to the extent the amount of
any such set off exceeds its Pro Rata Share of the Liabilities, purchase for
cash (and the other Lenders or holders shall sell) participations in each such
other Lender's or holder's Pro Rata Share of the Liabilities as would be
necessary to cause such Lender to share such excess with each other Lender or
holder in accordance with their respective Pro Rata Shares. Borrower agrees, to
the fullest extent permitted by law, that (i) any Lender or holder may exercise
its right to set off with respect to amounts in excess of its Pro Rata Share of
the Liabilities and may sell participations in such excess to other Lenders and
holders and (ii) any Lender or holder so purchasing a participation in the Loans
made or other Liabilities held by other Lenders or holders may exercise all
rights of set-off, bankers' lien, counterclaim or similar rights with respect to
such participation as fully as if such Lender or holder were a direct holder of
Loans and other Liabilities in the amount of such participation.
29
SECTION 2.12 CERTAIN MATTERS RELATING TO LETTERS OF CREDIT.
2.12.1 ISSUANCE OF LETTERS OF CREDIT. Agent and Lenders shall not
be obligated to issue an LC Guaranty or cause an Issuing Bank to issue any
Letter of Credit for the account of Borrower if at the time of such requested
issuance:
(a) The face amount of such requested Letter of Credit (i) when added
to the Reimbursement Obligations then outstanding, would cause LC Exposure to
exceed $2,000,000, (ii) when added to the aggregate outstanding principal amount
of Revolving Loans and all Reimbursement Obligations then outstanding would
cause Total Revolving and LC Exposure to exceed the Borrowing Base then in
effect or (iii) when added to the aggregate outstanding principal amount of
Revolving Loans and all Reimbursement Obligations then outstanding would cause
Total Revolving and LC Exposure to exceed the Revolving Commitment; or
(b) Any order, judgment or decree of any Governmental Authority or
arbitrator shall purport by its terms to enjoin or restrain the Issuing Bank
from issuing such Letter of Credit or Agent or any Lender from issuing an LC
Guaranty or any Requirement of Law applicable to Agent, any Lender or the
Issuing Bank or any request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over Agent, Lenders or
the Issuing Bank shall prohibit, or request that Agent or the Issuing Bank
refrain from, the issuance of guaranties or letters of credit generally or such
Letter of Credit or LC Guaranty in particular or shall impose upon Agent, any
Lender or the Issuing Bank with respect to such Letter of Credit or LC Guaranty
any restriction or reserve or capital requirement (for which Agent or such
Lender or the Issuing Bank is not otherwise compensated) not in effect as of the
date of this Agreement, or any unreimbursed loss, cost or expense which was not
applicable, in effect or known to Agent, Lenders or the Issuing Bank as of the
Closing Date; or
(c) A default of any Lender's obligations to fund exists, unless
Agent and the Issuing Bank have entered into satisfactory arrangements with
Borrower to eliminate Agent's and the Issuing Bank's risk with respect to such
Lender, including cash collateralization of such Lender's Pro Rata Share of the
Reimbursement Obligations; or
(d) Any of the conditions set forth in SECTION 12 shall not have been
satisfied or waived in writing.
2.12.2 TERMS OF LETTERS OF CREDIT. The Letters of Credit shall be
in a form satisfactory to the Issuing Bank and Lenders and consistent with the
provisions of this Agreement. At the time of issuance, the amount and the terms
and conditions of each Letter of Credit, and of any drafts or acceptances
thereunder, shall be subject to approval by Agent and Borrower. In no event may
the term of any standby Letter of Credit issued hereunder (or the term of any
renewal or extension thereof) exceed 360 days nor the term of any documentary
Letter of Credit exceed 120 days, and all Letters of Credit issued hereunder
shall expire no later than the date that is three (3)
30
Business Days prior to the Revolving Loan Termination Date. In addition to
all other terms and conditions set forth in this Agreement, the issuance by
Agent of any LC Guaranty shall be subject to the conditions precedent that
the Issuing Bank be satisfactory to Agent and that the Letter of Credit for
which Borrower requests a LC Guaranty be in such form, contain such terms and
support such transactions as are reasonably satisfactory to Agent. Borrower
shall comply with all such terms and conditions imposed by any Issuing Bank
or by Agent with respect to the issuance of any Letter of Credit, whether
such terms and conditions are imposed in the application for such Letter of
Credit, the LC Guaranty with respect to such Letter of Credit or otherwise.
2.12.3 LENDERS' PARTICIPATION. Immediately upon issuance or
amendment by Agent of any LC Guaranty in accordance with the procedures set
forth in this Agreement, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from Agent, without recourse or warranty,
an undivided interest and participation to the extent of such Lender's Pro Rata
Share in the liability with respect to such LC Guaranty and the related Letter
of Credit (including, without limitation, all obligations of Borrower with
respect thereto to Agent, other than amounts owing to the Issuing Bank
consisting of Issuing Bank Fees) and any security therefor or guaranty
pertaining thereto.
2.12.4 NOTICE OF ISSUANCE. Whenever Borrower desires the issuance
of a Letter of Credit, Borrower shall deliver to Agent an LC Guaranty Request
(as hereinafter defined) no later than 1:00 P.M. Chicago time at least three (3)
Business Days in advance of the proposed date of issuance of any Letter of
Credit. The transmittal by Borrower of each LC Guaranty Request shall be deemed
to be a representation and warranty by Borrower that the Letter of Credit may be
issued in accordance with and will not violate any of the requirements of
SECTION 12. Prior to the date of issuance of each Letter of Credit, Borrower
shall provide to Agent a precise description of the documents and the text of
any certificate to be presented by the beneficiary of such Letter of Credit
which if presented by such beneficiary on or prior to the expiration date of the
Letter of Credit would require the Issuing Bank to make payment under the Letter
of Credit. Agent, in its reasonable judgment, may require changes in any such
documents and certificates. No Letter of Credit shall require payment against a
conforming draft to be made thereunder prior to the second business day after
the date on which such draft is presented, together with all documents and/or
certificates required to be presented in connection therewith under the terms of
the applicable Letter of Credit.
2.12.5 PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. Borrower
shall be irrevocably and unconditionally obligated forthwith without
presentment, demand, protest or other formalities of any kind, to reimburse
Agent, on behalf of Lenders, for any amounts paid by Lenders with respect to
each LC Guaranty including all amounts paid by Lenders upon any draw with
respect to a Letter of Credit, any guaranty or reimbursement obligation paid by
Lenders to any Person upon any draw upon a Letter of Credit and all fees, costs
and expenses paid by Lenders to any Issuing Bank. All such reimbursement
obligations shall be due and payable on demand. In the event of any drawing
under any Letter of Credit by the beneficiary thereof, Borrower shall give
notice to be received by Agent on the Business Day prior to the Business Day on
which such drawing is payable if Borrower intends to reimburse the Issuing Bank
for the amount of such drawing with funds other
31
than the proceeds of Loans. Such notice from Borrower shall be irrevocable
and, if given, Borrower shall reimburse the Issuing Bank not later than the
close of business Chicago time on the day on which such drawing is honored in
an amount in immediately available funds equal to the amount of such drawing.
If Agent shall not have timely received such notice (i) Borrower shall be
deemed to have timely requested the making of Revolving Loans on the date on
which such drawing is honored in an amount equal to the amount of such
drawing and (ii) subject to satisfaction or waiver of the conditions
specified in SECTION 12 and the other terms and conditions of Revolving Loans
contained herein, Agent shall notify Lenders thereof, and Lenders shall, on
the date of such drawing, make Revolving Loans in the amount of their Pro
Rata Share of such drawing, the proceeds of which shall be applied directly
by Agent to reimburse the Issuing Bank for the amount of such drawing or
payment. If for any reason, proceeds of such Loans are not received by Agent
on such date in an amount equal to the amount of such drawing, Borrower shall
be obligated to and shall (without prejudice to any rights of Borrower
against any Lenders who fail to fund such Loans) reimburse Agent, on the
business day (under the laws of the jurisdiction of the Issuing Bank)
immediately following the date of such drawing, in an amount in immediately
available funds equal to the excess of the amount of such drawing over the
amount of such Loans, if any, which are so received, plus accrued interest on
such amount at the rate set forth in SECTION 4.2. Each Lender acknowledges
and agrees that its obligation to reimburse Agent pursuant to this SECTION
2.12.5 is absolute and unconditional and shall not be affected by any
circumstance whatsoever including the occurrence or continuance of an
Unmatured Event of Default or an Event of Default, and further acknowledges
and agrees that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.
2.12.6 PAYMENT BY LENDERS. In the event that Borrower does not
reimburse Agent for the full amount of any drawing pursuant to SECTION 2.12.5 ,
Agent shall promptly notify each Lender of the unreimbursed amount of such
drawing and of such Lender's respective participation therein. Unless Agent
shall have so elected, each Lender shall make available to Agent an amount equal
to such Lender's respective participation in immediately available funds, not
later than 1:00 P.M. Chicago time on the Business Day after the date notified by
Agent. In addition, in the event that any Lender fails to make available to
Agent the amount of any such Lender's participation in such LC Guaranty as
provided in this SECTION 2.12.6, Agent may, but shall not be obligated to, fund
the amount of such Lender's participation in such LC Guaranty and recover such
amount on demand from such Lender. In the event that any Lender fails to make
available to Agent the amount of such Lender's participation in such LC Guaranty
as provided in this SECTION 2.12.6, and Agent does not elect to fund to the
Issuing Bank such defaulting Lender's participation in such LC Guaranty as
provided in the immediately preceding sentence, Agent shall be entitled to
recover such amount on demand from such Lender together with interest at the
Prime Rate. Agent shall distribute to each other Lender which has paid all
amounts payable by it under this SECTION 2.12.6 with respect to any Letter of
Credit such other Lender's Pro Rata Share of all payments subsequently received
by Agent from Borrower in reimbursement of payments made by Agent under such
Letter of Credit when such payments are received.
32
2.12.7 ISSUING BANK. As between Borrower, the Issuing Bank, Agent
and each Lender, Borrower assumes all risks of the acts and omissions of the
Issuing Bank, or misuse of the LC Guaranties or Letters of Credit by the
respective beneficiaries of such LC Guaranties and Letters of Credit. In
furtherance and not in limitation of the foregoing, neither Agent nor any of
Lenders shall be responsible (a) for the form, validity, sufficiency, accuracy,
genuineness or legal effects of any document submitted by any party in
connection with the application for and issuance of or any drawing honored under
such LC Guaranties or Letters of Credit even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged, (b)
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such LC Guaranty or Letter of Credit, or
the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason, (c) for failure of
the beneficiary of any such Letter of Credit to strictly comply with conditions
required in order to draw upon such Letter of Credit, (d) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex, telecopy or otherwise, whether or not they be in
cipher, (e) for errors in interpretation of technical terms, (f) for any loss or
delay in the transmission or otherwise of any document required in order to make
a drawing or request a payment under any such LC Guaranty or Letter of Credit,
or of the proceeds thereof, (g) for the misapplication by the beneficiary of any
such LC Guaranty or Letter of Credit, of the proceeds of any drawing honored or
payment under such LC Guaranty or Letter of Credit, and (h) for any consequences
arising from causes beyond the control of the Issuing Bank, Agent or Lenders,
except, in each case, as the result of the gross negligence or willful
misconduct of the Issuing Bank. None of the abve shall affect, impair, or
prevent the vesting of any of Agent's rights or powers hereunder. In
furtherance and extension of, and not in limitation of, the specific provisions
hereinabove set forth, Borrower hereby agrees that any action taken or omitted
by Agent or any Lender or any Issuing Bank under or in connection with any LC
Guaranty or Letter of Credit or any related certificates, or the Collateral
relating thereto, if taken or omitted in good faith, shall be binding on
Borrower and shall not impose any resulting liability on Agent or any Lender or
relieve Borrower of any of its obligations hereunder to any such Person.
2.12.8 OBLIGATIONS ABSOLUTE. The obligations of Borrower to
reimburse Agent and Lenders for payments made under the LC Guaranty or in
connection with any Letter of Credit and the obligations of Lenders under
SECTION 2.12 shall be unconditional and irrevocable and shall be paid strictly
in accordance with the terms of this Agreement under all circumstances
including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of any Letter of Credit;
(b) the existence of any claim, set-off, defense or other right which
Borrower or any Affiliate of Borrower may have at any time against a beneficiary
or any transferee of any Letter of Credit or LC Guaranty (or any Persons or
entities for whom any such beneficiary or transferee may be acting), the Issuing
Bank, Agent any Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction
(including any
33
underlying transaction between Borrower or any of its Affiliates and the
beneficiary for which such LC Guaranty was procured);
(c) any draft, demand, certificate or any other documents 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;
(d) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Related Documents;
(e) payment by the Issuing Bank under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit;
(f) failure of any drawing under a Letter of Credit or any
non-application or misapplication by the beneficiary of the proceeds of any
drawing;
(g) any draft, demand, certificate or any other document presented
under any LC Guaranty proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(h) payment by Agent or any Lender under any LC Guaranty against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such LC Guaranty; PROVIDED that, in the case of any
payment by Agent or any Lender under such LC Guaranty, such Person has not acted
with gross negligence or wilful misconduct as determined by a final judgment,
not subject to review on appeal, of a court of competent jurisdiction in
determining that the demand for payment under any LC Guaranty complies on its
face with any applicable requirements for a demand for payment under such LC
Guaranty;
(i) any other circumstance or happening whatsoever, which is similar
to any of the foregoing; or
(j) the fact that an Unmatured Event of Default or an Event of
Default shall have occurred and be continuing;
PROVIDED, HOWEVER, that Borrower shall have no obligation to reimburse the
Issuing Bank, and Lenders shall have no obligation under SECTION 2.12, in the
event of the Issuing Bank's willful misconduct or gross negligence in
determining whether documents presented under the Letter of Credit comply with
the terms of such Letter of Credit.
2.12.9 AGENT'S EXECUTION OF APPLICATIONS AND OTHER ISSUING BANK
DOCUMENTATION; RELIANCE ON CREDIT AGREEMENT BY ISSUING BANK. Agent shall be
authorized to execute, deliver and perform on behalf of Lenders such LC
Guaranties, letter of credit applications,
34
shipping indemnities, letter of credit modifications and consents and other
undertakings for the benefit of the Issuing Bank as may be reasonably
necessary or appropriate in connection with the issuance or modification of
Letters of Credit requested by Borrower hereunder.
2.12.10 CASH COLLATERAL. Upon demand by Agent or the Required
Lenders after the occurrence of any Event of Default, Borrower shall deposit
with Agent for the benefit of Lenders with respect to each Letter of Credit then
outstanding, promptly upon such demand, cash or Cash Equivalents in an amount
equal to 110% of the greatest amount for which such Letter of Credit may be
drawn. Such deposit shall be held by Agent for the benefit of the Issuing Bank
and the other Lenders as security for, and to provide for the payment of,
outstanding Letters of Credit.
2.12.11 INDEMNIFICATION. In addition to amounts payable as
elsewhere provided herein and to the provisions of SECTION 14.5, Borrower hereby
agrees to indemnify, exonerate and hold each Lender Party free and harmless from
and against any and all claims, demands, actions, causes of action, suits,
losses, costs (including attorneys' fees and disbursements), charges,
liabilities and damages, and expenses in connection therewith (irrespective of
whether such Person is a party to the action for which indemnification hereunder
is sought) which such Lender Party incurs or is subject to as a consequence,
directly or indirectly, of (a) the issuance of any LC Guaranty or Letter of
Credit, other than as a result of the gross negligence or willful misconduct of
such Person as determined by a court of competent jurisdiction, or (b) the
failure of any Lender or Agent to honor a demand under a Letter of Credit or LC
Guaranty as a result of any act or omission relating to a Letter of Credit or LC
Guaranty, whether rightful or wrongful, of any present or future de jure or de
facto Governmental Authority (herein all such acts or omissions being called
"GOVERNMENTAL ACTS"). Borrower's unconditional obligations to Agent and Lenders
hereunder shall not be modified or diminished for any reason or in any manner
whatsoever. Borrower agrees that any charges made to Agent or Lenders for
Borrower's account by any Issuing Bank shall be conclusive as between such
Persons and Borrower and may be charged to the Loan Account. All obligations
under this SECTION 2.12.11 shall survive termination of this Agreement.
The Issuing Bank shall not be liable for any error, negligence, or
mistake, whether omission or commission, in following Borrower's instructions or
those contained in any Letter of Credit or of any modifications, amendments or
supplements thereto or in issuing or paying any Letter of Credit, except for the
Issuing Bank's gross negligence or wilful misconduct.
SECTION 2.13 LOAN ACCOUNT. Agent shall maintain a loan account
("LOAN ACCOUNT") on its books in which shall be recorded (a) all Loans and
advances made to Borrower pursuant to this Agreement, (b) the issuance of all LC
Guaranties, (c) all payments made by Borrower on all Loans and (d) all other
appropriate debits and credits as provided in this Agreement including all fees,
charges, expenses and interest. The failure so to record any such information
or any error in so recording any such information shall not, however, limit or
otherwise affect the actual obligations of Borrower hereunder or under the Notes
to repay the principal amount of all Loans together with all interest accruing
thereon. All entries in the Loan Account shall be made in accordance with
Agent's customary accounting practices as in effect from time to time. Borrower
shall pay the Liabilities reflected as owing by it under the Loan Account
(absent manifest error or
35
omission) and all other Liabilities hereunder as such amounts become due or
are declared due pursuant to the terms of this Agreement. So long as an
Unmatured Event of Default or an Event of Default shall have occurred and be
continuing, Borrower irrevocably waives the right to direct the application
of any and all payments at any time or times thereafter received by Agent or
any Lender from or on behalf of Borrower, and Borrower does hereby
irrevocably agree that each Lender shall have the continuing exclusive right
to apply and to reapply any and all payments received at any time or times
hereafter against the Liabilities in such manner as such Lender may deem
advisable notwithstanding any previous entry by Agent upon the Loan Account
or by Agent or such Lender on any other books and records.
SECTION 2.14 STATEMENTS. All Loans and advances to Borrower, and
all other debits and credits provided for in this Agreement, shall be evidenced
by entries made by Agent in the Loan Account and in Agent's books and records
showing the date, amount and character for each such debit or credit. Until
such time as Agent shall have rendered to Borrower written statements of account
as provided herein, the balance in the Loan Account, as set forth on Agent's
most recent printout or other written statement, shall be rebuttably presumptive
evidence of the amounts due and owing to each Lender by Borrower; PROVIDED that
any failure to so record or any error in so recording shall not limit or
otherwise affect Borrower's obligations to pay the Liabilities. Not more than
twenty (20) days after the last day of each calendar month, Agent shall render
to Borrower a statement setting forth the principal balance of the Loan Account
and the calculation of interest and fees due thereon. Each such statement shall
be subject to subsequent adjustment by Agent but shall, absent manifest errors
or omissions, be presumed correct and binding upon Borrower, and shall
constitute an account stated unless, within thirty (30) days after receipt of
any statement from Agent, Borrower shall deliver to Agent in accordance with
Section 14.3 written objection thereto specifying the error or errors, if any,
contained in such statement. In the absence of a written objection delivered to
Agent as set forth in this SECTION 2.14, Agent's statement of the Loan Account
shall be conclusive evidence of the amount of the Liabilities.
SECTION 3 NOTES; RECORDKEEPING.
SECTION 3.1 TERM NOTE. The Term Loan of each Lender shall be
evidenced by a promissory note (herein, as from time to time supplemented,
extended or replaced, called the "TERM NOTE") substantially in the form set
forth in EXHIBIT C, with appropriate insertions, dated the date hereof, payable
to the order of such Lender in the maximum principal amount of such Lender's Pro
Rata Share of the Term Commitment.
SECTION 3.2 REVOLVING NOTE. The Revolving Loans of each Lender
shall be evidenced, in part, by a promissory note (herein, as from time to time
supplemented, extended or replaced, called the "REVOLVING NOTE") substantially
in the form set forth in EXHIBIT D, with appropriate insertions, dated the date
hereof, payable to the order of such Lender in the amount of such Lender's Pro
Rata Share of the maximum principal amount of the initial amount of the
Revolving Commitment.
36
SECTION 4 INTEREST.
SECTION 4.1 INTEREST RATES. Subject to SECTION 4.3, Borrower
hereby promises to pay interest on the outstanding principal amount of each Loan
for the period commencing on the date thereof until such Loan is paid in full,
at a rate per annum determined by reference to the Prime Rate or the LIBOR Rate,
respectively. The applicable basis for determining the rate of interest shall
be selected by Borrower at the time a borrowing is requested pursuant to SECTION
2.3 or at the time a Notice of LIBOR Activity is given pursuant to SECTION
4.3(B), as the case may be. If on any day any portion of any Loan is
outstanding with respect to which notice has not been given to Agent in
accordance with the terms of this Agreement specifying the basis for determining
the rate of interest thereon, then for that day, such portion of such Loan shall
be a Prime Rate Loan and shall bear interest at a rate determined by reference
to the Prime Rate. Subject to SECTION 4.3, (i) each Prime Rate Revolving Loan
and LIBOR Rate Revolving Loan shall bear interest at a rate per annum determined
as follows: (a) for each Loan constituting a Prime Rate Revolving Loan, then at
the sum of the Prime Rate in effect from time to time PLUS the Prime Rate
Revolving Margin; and (b) for each Loan constituting a LIBOR Rate Revolving
Loan, then at the sum of the LIBOR Rate for the applicable Interest Period plus
the LIBOR Rate Revolving Margin; and (ii) each Prime Rate Term Loan and LIBOR
Rate Term Loan shall bear interest at a rate per annum determined as follows:
(a) for each Loan constituting a Prime Rate Term Loan, then at the sum of the
Prime Rate in effect from time to time plus the Prime Rate Term Margin; or (b)
for each Loan constituting a LIBOR Rate Term Loan, then at the sum of the LIBOR
Rate for the applicable Interest Period plus the LIBOR Rate Term Margin.
The Prime Rate Revolving Margin, the Prime Rate Term Margin, the LIBOR
Rate Revolving Margin and the LIBOR Rate Term Margin will be 1.75%, 2.25%, 3.25%
and 3.75% per annum, respectively, as of the Closing Date. Upon satisfaction of
the criteria for Level II Status and five (5) days prior written notice from
Borrower to Agent thereof, the Prime Rate Revolving Margin, the Prime Rate Term
Margin, the LIBOR Rate Revolving Margin and the LIBOR Rate Term Margin will be
determined in accordance with the applicable margin set forth in the following
table for Level II Status. From and after Lenders' receipt of the Annual Report
for Borrower's Fiscal Year ending December 31, 1999, the Prime Rate Revolving
Margin, the Prime Rate Term Margin, the LIBOR Rate Margin and the LIBOR Rate
Term Margin shall be determined in accordance with the following table based on
Borrower's Status as reflected in the then most recent Annual Report or
quarterly financial statements of Borrower delivered pursuant to SECTION 11.1(b)
or (c):
PRIME RATE
----------
REVOLVING LIBOR RATE
--------- PRIME RATE REVOLVING LIBOR RATE
STATUS MARGIN TERM MARGIN MARGIN TERM MARGIN
------ ------ ----------- ------ -----------
Level I Status 1.75% 2.25% 3.25% 3.75%
Level II Status 1.50% 2.00% 3.00% 3.50%
37
Level III Status 1.25% 1.75% 2.75% 3.25%
Level IV Status 1.00% 1.50% 2.50% 3.00%
Level V Status 0.75% 1.25% 2.25% 2.75%
Adjustments, if any, to the Prime Rate Revolving Margin, the Prime Rate Term
Margin, the LIBOR Rate Revolving Margin, or the LIBOR Rate Term Margin will be
made prospectively on a quarterly basis, commencing with the first day of the
first calendar month that occurs more than five Business Days after Agent has
received the applicable financial statements evidencing a change in status. If
Borrower fails to deliver the applicable financial statements to Agent at the
time required pursuant to SECTION 11.1, then, in addition to any other remedies
provided for in this Agreement, the Prime Rate Revolving Margin, the Prime Rate
Term Margin, the LIBOR Rate Revolving Margin and the LIBOR Rate Term Margin
shall be the highest Prime Rate Revolving Margin, Prime Rate Term Margin, LIBOR
Rate Revolving Margin and LIBOR Rate Term Margin, respectively, set forth on the
foregoing table until the first day of the first calendar month following the
delivery of such financial statements. If an Unmatured Event of Default or
Event of Default shall have occurred and be continuing at the time any reduction
in the Prime Rate Revolving Margin, the Prime Rate Term Margin, the LIBOR Rate
Revolving Margin or the LIBOR Rate Term Margin is to be implemented, such
reduction shall be deferred until the first day of the first calendar month
following the date on which no Unmatured Event of Default or Event of Default
shall exist.
SECTION 4.2 DEFAULT INTEREST.
(a) During any Default Interest Period, the unpaid principal amount
of (i) all Loans shall bear interest at the rate per annum set forth in SECTION
4.1 as to such Liabilities, and (ii) all other Liabilities shall bear interest
at the rate per annum applicable to Prime Rate Term Loans in each case PLUS 2%
per annum (the rate described in this CLAUSE (a) being herein called the
"DEFAULT RATE").
(b) For purposes of this SECTION 4.2, the term "DEFAULT INTEREST
PERIOD" shall mean a period of time (i) if an Event of Default under SECTIONS
13.1(a) or 13.1(e) occurs, commencing on the date on which such Event of Default
occurs and ending on the date on which such Event of Default is waived, or (ii)
if an Event of Default (other than under SECTION 13.1(a) or 13.1(e)) occurs,
commencing on the date of written notice to Borrower from Agent of such
occurrence and ending on the date such Event of Default is waived by the
Required Lenders.
38
SECTION 4.3 CONVERSION OR CONTINUATION.
(a) Subject to the provisions of SECTION 4.4, Borrower shall have the
option (i) to convert at any time all or any part of its outstanding Loans equal
to $100,000 and integral multiples of $100,000 in excess of that amount (or in
such other amount as Agent shall permit as shall be evidenced by the conversion
of such Loan by Agent) from a Prime Rate Loan to a LIBOR Rate Loan for a
specified Interest Period; (ii) to convert all or any part of its outstanding
Loans equal to $100,000 and integral multiples of $100,000 in excess of that
amount (or in such other amount as Agent shall permit as shall be evidenced by
the conversion of such Loan by Agent) from LIBOR Rate Loans to Prime Rate Loans
on the expiration date of any Interest Period applicable thereto; or (iii) upon
the expiration of the Interest Period with respect to any LIBOR Rate Loans, to
continue all or any portion of such Loans equal to $100,000 and integral
multiples of $100,000 in excess of that amount (or in such other amount as Agent
shall permit as shall be evidenced by the continuation of such Loan by Agent) as
LIBOR Rate Loans for a specified Interest Period, and the succeeding Interest
Period(s) of such continued Loans shall commence on the expiration date of the
Interest Period applicable thereto; PROVIDED, HOWEVER, that, notwithstanding the
foregoing, pursuant to SECTION 4.4(h), no outstanding Loan may be continued as,
or be converted into, a LIBOR Rate Loan when any Event of Default or Unmatured
Event of Default has occurred and is continuing.
(b) In the event Borrower shall elect to convert or continue a Loan
under SECTION 4.3(a), Borrower shall deliver to Agent a written Notice of LIBOR
Activity which shall set forth the details of such proposed conversion or
continuation, as the case may be, by 12:00 noon, Chicago time three (3) Business
Days prior to, but in any event not more than five (5) Business Days prior to,
the proposed conversion/continuation date. Upon conversion or continuation by
Agent in accordance with this Agreement pursuant to any Notice of LIBOR
Activity, Borrower shall have effected the conversion/continuation of Loans
hereunder.
(c) The officers and employees of Borrower authorized to request a
Loan on behalf of Borrower are also authorized to request a
conversion/continuation on behalf of Borrower. Neither Agent nor any Lender
shall incur any liability to Borrower in acting upon any notice referred to
above which Agent believes in good faith to have been given by a duly authorized
officer or other person authorized to act on behalf of Borrower or for otherwise
acting in good faith under this SECTION 4.3.
(d) Each Notice of LIBOR Activity shall be irrevocable and Borrower
shall be bound to convert or continue in accordance therewith.
SECTION 4.4 SPECIAL PROVISIONS GOVERNING LIBOR RATE LOANS.
Notwithstanding anything to the contrary contained in this Agreement, the
following provisions shall govern with respect to LIBOR Rate Loans as to the
matters covered:
(a) DETERMINATION OF INTEREST PERIOD. By giving notice as set forth
in SECTIONS 2.3 or 4.3(b), as the case may be, Borrower shall, subject to the
other provisions of this SECTION 4.4
39
specify whether the Interest Period applicable to any requested LIBOR Rate
Loan shall be a one-month, three-month or six-month period. The
determination of Interest Periods shall be further subject to the following
provisions: (i) in the case of immediately successive Interest Periods, each
successive Interest Period shall commence on the day on which the immediately
preceding Interest Period expires; (ii) if any Interest Period would
otherwise expire on a day which is not a Business Day, the Interest Period
shall be extended to expire on the next succeeding Business Day; (iii)
Borrower may not select an Interest Period for the Term Loan which terminates
later than the Final Maturity Date or for any Revolving Loan which terminates
later than the Revolving Loan Termination Date then in effect; (iv) Borrower
may not select an Interest Period with respect to any portion of principal of
a Loan which extends beyond a date on which Borrower could reasonably be
expected to be required to make a mandatory payment or prepayment of that
portion of principal; (v) 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 (ii) above) end on
the first Business Day following the last day of such calendar month; and
(vi) there shall be no more than five (5) LIBOR Rate Loans in effect at any
one time.
(b) DETERMINATION OF INTEREST RATE. As soon as practicable on the
LIBOR Interest Rate Determination Date, Agent shall determine (which
determination shall, absent manifest error, be presumptively correct) the
interest rate which shall apply to such Loans for such Interest Period and shall
promptly give notice thereof (in writing or by telephone) to Borrower.
(c) SUBSTITUTED RATE OF BORROWING. In the event that on any LIBOR
Interest Rate Determination Date with respect to any Loans, Agent shall have
determined (which determination shall be presumptively correct and binding upon
all parties) that, by reason of any changes arising after the date of this
Agreement affecting the London interbank market, adequate and fair means do not
exist for ascertaining the LIBOR Rate on a basis consistent with the essential
intent of the parties hereto, then, and in each such event, the right of
Borrower to select the LIBOR Rate with respect to such Loans shall be suspended
until Agent shall notify Borrower that the circumstances causing such suspension
no longer exist, and such Loans shall be Prime Rate Loans.
(d) ILLEGALITY. Notwithstanding anything to the contrary contained
in this Agreement, in the event that on any date any Lender shall have
reasonably determined (which determination shall be final and conclusive and
binding upon all parties) that the making or continuation of its LIBOR Rate
Loans violates any applicable law, treaty, governmental rule, regulation or
order (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful), then, and in any such event, such Lender
shall promptly give notice (by telephone confirmed in writing) to Borrower of
that determination. Subject to the prior withdrawal of a Notice of LIBOR
Activity or prepayment of the LIBOR Rate Loans of Lenders as contemplated by the
following SECTION 4.4(e), the obligation of Lenders to make or maintain its
LIBOR Rate Loans during any such period shall be terminated at the earlier of
the termination of the Interest Period then in effect or when required by law,
and Borrower shall no later than the termination of the Interest Period in
effect at the time any such determination pursuant to this SECTION
40
4.4(d) is made or, earlier, when required by law, repay the LIBOR Rate Loans
of Lenders, together with all interest accrued thereon and amounts payable
under SECTION 4.4(f).
(e) OPTIONS OF BORROWER. In lieu of prepaying Lenders as required by
SECTION 4.4(d) above, Borrower may, by giving notice (by telephone confirmed
immediately by telecopy) to Agent and subject to the other terms of this
Agreement, request Lenders to make the LIBOR Rate Loan then being requested as a
Prime Rate Loan or to continue to maintain its outstanding Prime Rate Loan then
the subject of a Notice of LIBOR Activity as a Prime Rate Loan or to convert its
LIBOR Rate Loans then outstanding that are so affected into Prime Rate Loans at
the end of the then current Interest Period (or at such earlier time as
prepayment is otherwise required) in the manner contemplated by SECTION 4.4 but
without satisfying the advance notice requirements therein.
(f) COMPENSATION. In addition to (but without duplication of) such
amounts as are required to be paid by Borrower pursuant to SECTIONS 4.1, 4.2,
8.1, 8.2, 8.3 and 8.4, Borrower shall compensate each Lender for all losses,
costs, expenses and liabilities, including, without limitation, any loss, cost
or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund or maintain such Lender's LIBOR Rate
Loans to Borrower, which such Lender may sustain (i) if for any reason a
borrowing of any LIBOR Rate Loan does not occur on a date specified therefor in
a Notice of LIBOR Activity (other than by reason of such Lender's failure to
fund its Loan hereunder as to which all of the conditions thereto set forth in
this Agreement have been satisfied), or if a successive Interest Period does not
commence after notice therefor is given pursuant to SECTION 4.3(b), (ii) if any
voluntary or mandatory prepayment of any LIBOR Rate Loan occurs for any reason
on a date which is not the last day of an Interest Period, (iii) as a
consequence of any required conversion of a LIBOR Rate Loan to a Prime Rate Loan
as a result of any of the events indicated in SECTIONS 4.4(d) or 4.4(e), or (iv)
as a consequence of any other default by Borrower to repay any LIBOR Rate Loan
when required by the terms of this Agreement. In addition, Borrower shall pay
Lenders and Agent their customary administrative charges and fees incurred in
connection with any of the foregoing.
(g) MANNER OF FUNDING OF LIBOR RATE LOANS. Each Lender shall be
entitled to fund and maintain its funding of all or any part of any LIBOR Rate
Loan requested by Borrower hereunder in any manner it sees fit, it being
understood and agreed, however, that for the purposes of this Agreement, all
determinations under this SECTION 4.4 shall be made as if such Lender had
actually funded and maintained each LIBOR Rate Loan during each Interest Period
for such Loan through the purchase of deposits in the London interbank market
having a maturity corresponding to such Interest Period and bearing an interest
rate equal to the LIBOR Rate for such Interest Period.
(h) LIBOR RATE LOANS AFTER DEFAULT. Unless the Required Lenders
shall otherwise agree in writing, after occurrence and during the continuance of
an Unmatured Event of Default or an Event of Default, Borrower may not elect to
have a Loan be made or continued as, or converted to, a LIBOR Rate Loan after
the expiration of any Interest Period then in effect for that Loan.
41
SECTION 4.5 INTEREST PAYMENT DATES. Accrued interest on each Prime
Rate Loan shall be payable quarterly in arrears on the fifteenth day of each
January, April, July and October, and at maturity, commencing with July 15,
1999. Accrued interest on each LIBOR Rate Loan shall be payable in arrears on
each LIBOR Interest Payment Date applicable to such Loan and, in any event, at
maturity. After maturity (whether by acceleration or otherwise), accrued
interest on all Loans shall be payable on demand.
SECTION 4.6 SETTING OF RATES. Interest rates hereunder shall be
calculated from time to time by Agent and each such calculation of an interest
rate shall be conclusive and binding on Borrower in the absence of demonstrable
error.
SECTION 4.7 COMPUTATION OF INTEREST. Interest on each Loan shall
be computed for the actual number of days elapsed on the basis of a year
consisting of 360 days. In computing interest on any Loan, the date of the
making of the Loan or the first day of an Interest Period, as the case may be,
shall be included and the date of payment of the Loan or the expiration date of
an Interest Period, as the case may be, shall be excluded; PROVIDED, HOWEVER,
that if a Loan is repaid on the same day on which it is made, one day's interest
shall in any event be paid on that Loan. The interest rate applicable to each
Prime Rate Loan shall change simultaneously with each change in the Prime Rate.
SECTION 5 FEES.
SECTION 5.1 NON-USE FEES. Borrower shall pay to Agent for the
benefit of each Lender, on a quarterly basis, a non-use fee (the "NON-USE FEE")
for the period from and including the date hereof to but excluding the Revolving
Loan Termination Date (or such earlier date on which the Revolving Loan
Commitment shall be terminated pursuant to SECTION 2.6(a) or SECTION 13.2) of
one-half of one percent (0.50%) per annum on the excess of (i) the daily average
of such Lender's Pro Rata Share of the then applicable Revolving Commitment OVER
(ii) the daily average of such Lender's Pro Rata Share of the aggregate
principal amount of the Total Revolving and LC Exposure. Such Non-Use Fees
shall be payable in arrears on the fifteenth day of each January, April, July
and October (commencing on July 15, 1999) and on the Revolving Loan Termination
Date (or such earlier date on which the Revolving Loan Commitment shall
terminate) for any period then ending for which such Non-Use Fee shall not have
been theretofore paid.
SECTION 5.2 COMMITMENT FEE. If not previously paid to Agent,
Borrower shall pay to Agent on the date of the initial Loan a non-refundable
commitment fee as set forth in the fee letter between Borrower and Agent dated
as of May 19, 1999 (the "FEE LETTER").
SECTION 5.3 CLOSING FEE. On the date of the initial Loan, Borrower
shall pay to Agent a non-refundable closing fee as set forth in the Fee Letter.
SECTION 5.4 LETTER OF CREDIT FEES. (a) Borrower shall pay to Agent
for the benefit of Lenders a fee (the "LETTER OF CREDIT FEE") for the period
from and including the first
42
date on which any Permitted LC is outstanding to but excluding the Revolving
Loan Termination Date (or such earlier date on which all of the LC Guaranties
shall no longer be of any force or effect and the originals thereof are
returned by the appropriate Issuing Bank to Lenders and the applicable
Issuing Bank shall have acknowledged in writing that Lenders shall have no
further obligations thereunder) in an amount equal to two and three quarters
percent (2.75%) per annum on the daily average of the LC Exposure. Such fees
shall be payable in arrears on the fifteenth day of each January, April, July
and October (commencing on July 15, 1999) and on the date on which all of the
LC Guaranties shall no longer be of any force or effect.
(b) Agent shall also be entitled to charge to the account of Borrower
as and when incurred by Agent or any Lender, any charges, fees, costs and
expenses charged to Agent or any Lender for Borrower's account by any Issuing
Bank (other than any fees charged to Agent or any Lender which would be
duplicative of the Letter of Credit Fee paid to Agent for the benefit of
Lenders) (the "ISSUING BANK FEES") in connection with the issuance of any
Letters of Credit by the Issuing Bank. In addition, Borrower agrees to pay to
Agent the Issuing Bank's customary issuing, administrative and negotiating fees
and Agent shall pay the charges owing to such Issuing Bank upon receipt of such
amounts from Borrower.
SECTION 5.5 AUDIT FEES. Borrower shall pay to Agent a collateral
audit fee (the "AUDIT FEE") in an amount not to exceed Agent's or its agents'
reasonable out-of-pocket costs, plus Seven Hundred Fifty Dollars ($750) per
person, per day, for each field audit conducted by Agent or its agents pursuant
to SECTION 11.3; provided that so long as no Unmatured Event of Default or Event
of Default shall have occurred and be continuing, Borrower shall not be liable
for reimbursing Agent for the costs and expenses of more than three (3) field
audits in any Fiscal Year.
SECTION 5.6 COMPUTATION OF FEES. All fees shall be computed for
the actual number of days elapsed on the basis of a year consisting of 360 days.
SECTION 6 ACCOUNT AGREEMENTS; ACCOUNTS: LIST OF ACCOUNTS AND
ACCOUNT STATEMENTS.
SECTION 6.1 ACCOUNT AGREEMENTS. Prior to the date of the initial
Loan, Borrower, Master Account Bank and such other Persons as are designated by
Agent shall enter into a Bank Agency Agreement (herein, as the same may be
amended, modified or supplemented from time to time, called the "BANK AGENCY
AGREEMENT"). Pursuant to the Collateral Documents, including the Bank Agency
Agreement, Borrower shall grant to Agent a continuing first priority lien upon,
and security interest in, the Master Account and the Operating Accounts, each
described below (collectively, the "BANK ACCOUNTS"), all funds, items,
instruments, investments, securities and other things of value at any time paid,
deposited, credited or held to or in the Lockbox or the Bank Accounts (whether
for collection, provisionally or otherwise), and all other Property of Borrower
from time to time in the possession or under the control of, or in transit to,
Agent, any Lender, Master Account Bank or any agent, bailee or custodian
therefor, and all proceeds of all of the foregoing. The Bank Agency Agreement
shall specify that throughout the term of this Agreement,
43
Master Account Bank, to the extent any such Person is a party to the Bank
Agency Agreement, (i) shall be pledgee-in-possession (for the benefit of
Lenders) of the Bank Accounts described therein, all Cash Instruments of
Borrower held by Master Account Bank, and all such funds, items, instruments,
investments, securities, other things of value, Property and proceeds, (ii)
shall take such action as shall be specified in written notice from Agent to
enable Agent to exercise its rights with respect to such lien and security
interest, (iii) shall be entitled to exercise all and any rights which Agent
or any Lender may have under this Agreement and the Related Documents or
applicable law with respect to the Bank Accounts described therein and such
other Property and (iv) shall provide Agent with copies of all statements
relating to the Bank Accounts provided by Master Account Bank to Borrower.
Notwithstanding any provision of this SECTION 6.1, Agent and Lenders shall
have no obligation to reconcile or verify, at any time or for any purpose,
any balance in any Account or any other account maintained by Master Account
Bank as agent for Agent and Lenders; PROVIDED, HOWEVER, that at the
reasonable request of Borrower, Agent shall request that Master Account Bank
verify balances in any Account maintained by Master Account Bank on behalf of
Borrower.
SECTION 6.2 DEPOSIT ACCOUNTS.
(a) MASTER ACCOUNT AND LOCKBOX. Agent shall maintain at Master
Account Bank the account identified as the "MASTER ACCOUNT" in the Bank Agency
Agreement (herein called the "MASTER ACCOUNT") and Borrower shall maintain a
lockbox with the Master Account Bank (herein called the "Lockbox"). Except as
provided in the Bank Agency Agreement, the Master Account and the Lockbox shall
be under the sole dominion and control of Agent, and Borrower shall not have any
right of withdrawal therefrom.
(b) OPERATING ACCOUNTS. Borrower shall maintain the operating
accounts at Master Account Bank described in the Bank Agency Agreement (such
accounts being herein referred to, collectively, as the "OPERATING ACCOUNTS"
and, individually, as an "OPERATING ACCOUNT").
(c) OTHER ACCOUNTS. Borrower shall not maintain any operating
account (other than the Operating Accounts), and agrees that it will not
maintain any bank, investment or other account of any kind whatsoever with any
other brokerage house or financial institution; PROVIDED, HOWEVER, that so long
as no Event of Default shall have occurred and be continuing, Borrower may
maintain the xxxxx cash and payroll accounts listed on SCHEDULE 6.3 hereto at
the financial institutions indicated thereon, PROVIDED that the aggregate amount
of funds on deposit in each such (i) xxxxx cash account shall not exceed
$10,000; and (ii) payroll account shall not at any time exceed the sum of all
accrued payroll and payroll tax obligations then payable by Borrower on its next
regular payroll or payroll tax payment date on account of payroll obligations
payable from such account; and PROVIDED, FURTHER, that (x) Borrower shall have
irrevocably instructed the relevant financial institution, at the request of
Agent, to provide Agent with information concerning such accounts, (y) such
financial institution shall have acknowledged such instructions in writing for
the benefit of Agent, and (z) at any time when an Event of Default or Unmatured
Event of Default has occurred and is continuing Borrower shall, at Agent's
request, promptly cause each such financial institution to provide Agent with
daily reports of the balance in each such account.
44
SECTION 6.3 LIST OF ACCOUNTS AND ACCOUNT STATEMENTS. All accounts
of Borrower and all payroll and xxxxx cash accounts of Borrower are described on
SCHEDULE 6.3. In the event Borrower opens any new accounts or closes any
account, Borrower shall deliver to Agent a revised version of SCHEDULE 6.3
showing any changes thereto within three (3) Business Days of any such change.
Borrower shall instruct all banks listed on SCHEDULE 6.3 to provide Agent with
copies of all statements issued by such banks with respect to the accounts
described on SCHEDULE 6.3.
SECTION 7 PROCEEDS OF COLLATERAL; APPLICATION OF FUNDS; DEEMED LOANS.
SECTION 7.1 PROCEEDS OF COLLATERAL; NOTICES TO ACCOUNT DEBTORS;
LOCKBOX. Borrower shall direct all Account Debtors to pay all Accounts and
other proceeds of Collateral directly to the Lockbox for deposit into the Master
Account. In addition, Borrower shall take all such actions as Agent in good
xxxxx xxxxx necessary or appropriate to ensure that at all times on and after
the date hereof all proceeds of Collateral (including, without limitation, all
Cash Instruments) are sent directly to the Lockbox. If, notwithstanding the
actions provided for in the preceding sentences of this SECTION 7.1, Borrower
shall receive, or any financial institution shall receive for the account of
Borrower, any Cash Instruments, Borrower shall, or shall cause such financial
institution to, transmit in the form received, before the close of business on
the next succeeding Business Day, all such Cash Instruments (properly endorsed,
where required, so that all items delivered may be collected by Master Account
Bank) to Master Account Bank for deposit in the Master Account. Borrower shall
not, and Borrower shall not permit or cause any such financial institution to,
commingle any Cash Instrument so received except in the Master Account, and
Borrower shall hold separate and apart from all other Property, all such Cash
Instruments in express trust for the benefit of Lenders until delivery thereof
is made to Master Account Bank. Pursuant to, and subject to the terms and
conditions of the Bank Agency Agreement, items deposited in the Lockbox shall be
credited to the Master Account. Borrower, and any of its Affiliates, employees,
lenders or other Persons acting for or in concert with Borrower, shall, acting
as trustee for Lenders, receive, as the sole and exclusive property of Lenders
any monies, checks, notes, drafts or any other payments relating to and/or
proceeds of Accounts of Borrower or other Collateral which come into the
possession or under the control of Borrower or any Affiliates, employees,
lenders or other Persons acting for or in concert with Borrower, and immediately
upon receipt thereof, Borrower or such other Persons shall remit the same or
cause the same to be deposited, in kind, into a Master Account or, at the
direction of Agent, shall remit the same, or cause the same to be remitted, in
kind, to Agent at Agent's address set forth in SECTION 14.3.
SECTION 7.2 APPLICATION OF MASTER ACCOUNT FUNDS. At the opening of
business on each Business Day, Agent shall calculate the amount of collected
funds on deposit in the Master Account (herein the "MASTER ACCOUNT COLLECTED
BALANCES" for such day). Thereafter, if no Event of Default shall have occurred
and be continuing and to the extent of Master Account Collected Balances
available on such Business Day, Agent shall transfer from the Master Account to
each Operating Account such amounts as shall (i) permit the payment of all
checks drawn on such Operating Account that are presented for payment to Agent
as of the preceding Business Day, (ii)
45
permit the payment by wire transfer of any wire transfers requested by
Borrower, provided that Borrower has given Agent notice of the amount of each
such wire transfer no later than 10:00 a.m. Chicago time on the date of such
wire transfer, and (iii) leave a zero balance in each Operating Account after
the payments set forth in CLAUSES (i) and (ii) above.
SECTION 7.3 APPLICATION OF FUNDS AVAILABLE FOR LOAN REPAYMENTS. If
after any disbursements are made pursuant to SECTION 7.2, there shall remain
Master Account Collected Balances in excess of $200,000, then such amount (which
shall be in an integral multiple of $5,000) as shall leave a balance of not less
than $100,000 nor greater than $105,000 in the Master Account shall be applied
to the outstanding obligations of Borrower in the following order of priority:
first, to principal of the Reimbursement Obligations and the Revolving Loans
then due and payable in such order as Agent shall determine (PROVIDED, HOWEVER,
that application on account of Liabilities constituting Revolving Loans shall be
made by Agent (a) first to all Prime Rate Revolving Loans and (b) only when no
Prime Rate Revolving Loans are outstanding to LIBOR Rate Revolving Loans);
SECOND, to interest then due and payable on the Reimbursement Obligations and
the Revolving Loans in such order as Agent shall determine; THIRD, to interest
on the Term Loan; FOURTH, to any fees hereunder then due and payable, in such
order as Agent may elect; and FIFTH, to the payment of any other Liabilities
then due and payable to Agent and Lenders in such order as Agent may determine.
Solely for purposes of calculating interest earned by each Lender with respect
to the Revolving Loans, any item of payment by or for the account of Borrower
received by Agent from the Master Account or otherwise shall be applied by Agent
on account of the Liabilities on the Business Day Agent has received immediately
available funds as a result of such payment.
SECTION 7.4 APPLICATION UPON AN EVENT OF DEFAULT. If an Event of
Default shall have occurred and be continuing, and notwithstanding the foregoing
SECTIONS 7.2 and 7.3 Agent may, in its discretion direct the Master Account Bank
from time to time to transfer all Master Account Collected Balances in the
Master Account to Agent for application to the Liabilities in such order as
Agent, in its sole discretion, shall elect. Master Account Bank shall be
entitled to rely on a written statement of Agent to the effect that an Event of
Default has occurred and is continuing.
SECTION 7.5 DEEMED LOANS.
(a) Notwithstanding any provision contained herein to the contrary,
if at any time or from time to time the Master Account Collected Balances is
less than $10,000, then Borrower shall, if Agent so elects, be deemed
automatically to have made a request for, and upon such payment Lenders shall be
deemed to have made, a Prime Rate Revolving Loan, in an amount equal to the
lesser of (i) the amount (which shall be in an integral multiple of $5,000)
necessary to increase the Master Account Collected Balances to an amount not
less than $100,000 nor greater than $105,000 and (ii) the remaining availability
under the Revolving Commitment.
(b) Notwithstanding any provision contained herein to the contrary,
and in addition to, and not in limitation of, any of the other rights or
remedies of Agent and Lenders set
46
forth herein, including, without limitation, pursuant to SECTION 7.4, at the
sole option of Agent, in order to facilitate timely payment hereunder of all
Liabilities in respect of (i) payments of interest due on any Loans, (ii)
payments of principal due on the Term Loan, (iii) payments of cash, fees,
expenses and other Liabilities due and payable by Borrower to Agent and
Lenders hereunder or under any of the Related Documents and (iv) payments by
Agent and Lenders of any amount due and payable under the Bank Agency
Agreement or any other agreement entered into by any one or more of Agent and
Lenders and Master Account Bank in connection with this Agreement (including,
without limitation, any amount resulting from the return, dishonor or other
non-payment of items deposited with Master Account Bank by or on behalf of
Borrower), then, whether or not there is Borrowing Availability under the
Revolving Commitment, Borrower shall be deemed automatically to have made a
request for, and upon such payment Lenders shall be deemed to have made, a
Prime Rate Revolving Loan, in the full amount of such payment.
(c) Borrower acknowledges that any Loan deemed to have been made to
Borrower under this SECTION 7.5 may cause Borrower to have exceeded the
Borrowing Availability, in which event Borrower shall be obligated to
immediately make a prepayment pursuant to SECTION 2.7(b).
SECTION 7.6 APPLICATION OF PROCEEDS. In the event Borrower shall
suffer any loss covered by insurance, Borrower shall immediately notify Agent in
writing, and Borrower hereby authorizes and directs each and every insurance
company concerned to make payments for such loss directly and solely to Agent
(who may, but need not, make proof of loss) and Agent is hereby authorized to
adjust, collect and compromise in its discretion all claims under all such
policies, and Borrower shall sign, upon demand by Agent, all receipts, vouchers
and releases required by such insurance companies; PROVIDED, HOWEVER, that other
than after the occurrence and during the continuance of an Event of Default,
Borrower may adjust, collect and compromise insurance claims upon notice to and
with Agent's consent (which shall be exercised reasonably and in good faith),
provided further Borrower is acting reasonably and diligently. In the event
Borrower shall be awarded any amount pursuant to any condemnation proceeding or
the taking or injury to any property for public use, Borrower shall immediately
notify Agent in writing and Borrower agrees that the proceeds of all such awards
shall be paid to Agent and authorizes Agent, on behalf and in the name of
Borrower to execute and deliver valid acquittances for and to appeal from any
such award. Borrower shall also immediately notify Agent of any actual or
threatened condemnation or eminent domain proceedings and shall give Agent at
any time any additional instruments requested by Agent for the purpose of
validly and sufficiently assigning all awards or appealing any such award.
Insurance proceeds and awards described in this SECTION 7.6 (collectively, "LOSS
PROCEEDS"), or any part thereof, received by Agent, after deducting therefrom
any expenses incurred, may be applied by Agent at its option (i) to the repair
or restoration of the property suffering any loss, condemnation or taking ("LOSS
PROPERTY"), (ii) to the payment of the Liabilities, whether or not due and in
whatever order Agent elects, or (iii) to any other purpose or objects for which
Agent or Lenders are entitled to advance funds under this Agreement, all without
affecting the lien or security interest created by the Collateral Documents, and
any balance of such monies shall be paid to Borrower or the Person lawfully
entitled thereto. None of Agent and Lenders shall be held
47
responsible for any failure to collect any insurance proceeds due under the
terms of any policy regardless of the cause of such failure unless due to the
gross negligence or willful misconduct of Agent or any Lender.
Notwithstanding the foregoing, Agent and Lenders agree that any Loss Proceeds
shall be applied as follows:
(a) If no Unmatured Event of Default or Event of Default has occurred
and is continuing at the time of the insured loss, condemnation or taking and
the amount of such Loss Proceeds together with all other Loss Proceeds
previously or contemporaneously paid to Agent for the benefit of Lenders
hereunder is less than $100,000, then such Loss Proceeds shall be paid into the
Master Account for application pursuant to this Agreement.
(b) If no Unmatured Event of Default or Event of Default has occurred
and is continuing at the time of the insured loss, condemnation or taking and
the amount of such Loss Proceeds, together with all other Loss Proceeds
previously or contemporaneously paid to Agent for the benefit of Lenders
hereunder is $100,000 or greater, then Agent will permit the Loss Proceeds to be
utilized toward the restoration of the Loss Property, provided that (i) business
interruption loss insurance will be payable to Borrower during the period
necessary to restore the Loss Property, (ii) the proceeds of such business
interruption insurance together with other funds available to Borrower will be
sufficient to pay all of Borrower's obligations during such period, (iii) after
giving effect to such proposed restoration no Event of Default or Unmatured
Event of Default will be in existence and (iv) prior to such utilization of the
Loss Proceeds, Agent shall be provided with (A) a full and complete set of plans
and specifications for the restoration of the Loss Property, and (B) a current
appraisal indicating that the value of the Loss Property following the
restoration as contemplated by such plans and specifications will be of a value
at least equal to the Loss Property prior to the loss, and (C) all other items
that may be reasonably requested by Agent in form and substance satisfactory to
Agent. The plans and specifications and the appraisal must be in a form and
content fully satisfactory to Agent. Agent shall disburse such Loss Proceeds
for the purpose of restoration of the Loss Property on a monthly basis upon
receipt of satisfactory draw requests and inspection reports of an architect
approved by Agent certifying as to the percentage of completion of the
restoration project. Agent shall retain a ten percent (10%) retainage of all
Loss Proceeds disbursed hereunder pending the issuance of a final certificate of
substantial completion issued by the inspecting architect certifying the
completion of the restoration of the Loss Property in accordance with the
approved plans and specifications. In the event of an Unmatured Event of
Default or Event of Default at any time following an insurance loss,
condemnation or taking, Lenders may apply all Loss Proceeds then in Agent's
possession as a reduction against the Liabilities. No interest shall be payable
by any Lender or Agent on account of any Loss Proceeds at any time held by any
Lender or Agent.
SECTION 8 INCREASED COSTS AND OTHER SPECIAL PROVISIONS.
SECTION 8.1 INCREASED COSTS. If, after the date hereof the
adoption of any applicable "law" (which expression, as used in this SECTION 8.1,
includes statutes, rules and regulations thereunder and interpretations thereof
by any competent court or by any governmental authority or other regulatory body
or official charged with the administration or the interpretation
48
thereof and requests, directives, instructions and notices at any time or
from time to time hereafter made upon or otherwise issued to any Lender by
any central bank or other fiscal, monetary or other Governmental Authority
(whether or not having the force of law)) adopted, becoming effective, or any
change in the interpretation or administration thereof or compliance by any
Lender with any request or directive (whether or not having the force of law)
of any such Governmental Authority, shall subject any Lender to any tax,
levy, impost, duty, charge, fee, deduction or withholding of any nature
(other than taxes imposed on or measured by the overall net income of any
Lender) or capital adequacy requirement with respect to, or shall impose or
increase or render applicable any special deposit, assessment, insurance
charge, reserve or liquidity or other similar requirement (whether or not
having the force of law) against assets held by, or deposits in or for the
account of, or loans made by any Lender, or shall otherwise increase the
effective cost of, the Loans, or any Lender's obligation to make, issue or
maintain the Loans, or shall change the basis of taxation of payments to any
Lender of the principal of or interest on the Loans or any other amounts due
under this Agreement in respect of the Loans, or any Lender's obligation to
make, issue or maintain the Loans (except for changes in the rate of tax on
the overall net income of any Lender), or shall impose on any Lender any
other condition or requirement affecting the Loans or any Lender's obligation
to make the Loans, and the result of any of the foregoing is to increase the
cost to such Lender of making, funding, issuing or maintaining the Loans, to
require such Lender to make any payment or to forego any interest or other
sum payable nder this Agreement, or to reduce the amount of any rate of
return or any sum received or receivable by such Lender under this Agreement
or under the Notes with respect thereto, then upon written notice of such
occurrence to Borrower by such Lender (which notice shall contain a statement
setting forth a description of such occurrence) at any time and from time to
time and as often as the occasion therefor may arise, Borrower shall pay to
such Lender such additional amount or amounts as will compensate such Lender
for such increased cost, payment, sum or such reduction.
SECTION 8.2 FUNDING LOSSES. Borrower hereby agrees that if any
Lender receives a notice (whether written or oral) of borrowing or repayment
pursuant to this Agreement and Borrower fails to borrow or repay strictly in
accordance therewith, then, upon demand by such Lender (which demand shall be
accompanied by a statement setting forth the basis for the calculations of the
amount being claimed) Borrower will indemnify such Lender against any net loss
or expense which such Lender may sustain or incur (including, without
limitation, any net loss or expense incurred by reason of the liquidation or
reemployment of funds acquired by such Lender to fund or maintain Loans), as
reasonably determined by such Lender, as a result of any failure of Borrower to
borrow or repay any Loan on a date specified therefor in a notice (whether
written or oral) of borrowing or repayment pursuant to this Agreement. For this
purpose, all notices to Agent and Lenders pursuant to this Agreement shall be
deemed to be irrevocable.
SECTION 8.3 DISCRETION OF LENDERS AS TO MANNER OF FUNDING.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of all or any part of the
Loans in any manner it sees fit.
SECTION 8.4 CONCLUSIVENESS OF STATEMENTS; SURVIVAL OF PROVISIONS.
In making the determinations contemplated by this SECTION 8, each Lender may
make such reasonable
49
estimates, assumptions, allocations and the like that such Lender in good
faith determines to be appropriate; and, subject to the foregoing clause,
determinations and statements of Lenders pursuant to this SECTION 8 shall be
conclusive absent demonstrable error. The provisions of this SECTION 8 shall
survive termination of this Agreement.
SECTION 9 COLLATERAL AND ELIGIBILITY REQUIREMENTS.
SECTION 9.1 ELIGIBLE ACCOUNTS. "ELIGIBLE ACCOUNTS" shall mean all
Accounts of Borrower other than the following: (a) Accounts which remain unpaid
as of ninety (90) days (provided that such period shall be 120 days as to those
Accounts from Account Debtors listed on annexed SCHEDULE 9.1A, if any, as
amended from time to time with the prior written consent of Agent) after the
date of the original invoice with respect thereto; (b) all Accounts owing by a
single Account Debtor, including a currently scheduled Account, if twenty-five
percent (25%) or more of the balance owing by such Account Debtor is ineligible
by reason of the criterion set forth in CLAUSE (a) of this SECTION 9.1; (c)
Accounts with respect to which the Account Debtor is an Affiliate of Borrower or
a director, officer or employee of Borrower or its Affiliates; (d) Accounts with
respect to which the Account Debtor is a Governmental Authority or prime
contractor thereof unless Borrower has complied in a manner satisfactory to
Agent with the Federal Assignment of Claims Act of 1940, as amended, or similar
law or statute, if any, of the relevant state, province, municipality or other
jurisdiction and any amendments thereto, relative to the assignment of such
Accounts; (e) except as to Accounts from Account Debtors listed on annexed
SCHEDULE 9.1B, as amended from time to time with the prior written consent of
Agent, Accounts with respect to which the Account Debtor is not a resident of
the United States or Canada (other than the provinces of Xxxxxx Xxxxxx Island,
Newfoundland and Nova Scotia and the Northwest Territories) unless such Account
is payable in United States Dollars and the Account Debtor has supplied Borrower
with (i) an irrevocable letter of credit, issued by a financial institution
satisfactory to Agent, in an amount sufficient to cover such Account and in form
and substance satisfactory to Agent and without right of setoff or (ii) foreign
credit insurance from an issuer, and in form and substance, satisfactory to
Agent in an amount sufficient to cover such Account, and provided Agent has been
made the loss payee with respect to such insurance pursuant to an endorsement
satisfactory in form and substance to Agent; (f) Accounts arising with respect
to goods which have not been shipped and delivered to and accepted as
satisfactory by the Account Debtor or arising with respect to services which
have not been fully performed and accepted as satisfactory by the Account
Debtor; (g) Accounts for which the prospect of payment in full or performance in
a timely manner by the Account Debtor is or is likely to become impaired as
determined by Agent in the reasonable exercise of its discretion; (h) Accounts
which are not invoiced (and dated as of the date of such invoice) and sent to
the Account Debtor within five (5) days after delivery of the underlying goods
to or performance of the underlying services for the Account Debtor; (i)
Accounts with respect to which Agent does not have a first and valid fully
perfected Lien free and clear of any other Lien; (j) Accounts with respect to
which the Account Debtor is the subject of bankruptcy or a similar insolvency
proceeding or has made an assignment for the benefit of creditors or whose
assets have been conveyed to a receiver or trustee; (k) Accounts with respect to
which the Account Debtor's obligation to pay the Account is contractually
conditional upon the Account Debtor's approval or is otherwise subject to any
50
repurchase obligation or return right (other than reurn rights arising in the
ordinary business practice of the Account Debtor), as with sales made on a
guaranteed sale, xxxx-and-hold, sale-or-return, demonstration, sale on approval
or other terms by reason of which the payment by the Account Debtor is or may be
conditional (except with respect to Accounts in connection with which Account
Debtors are entitled to return Inventory solely on the basis of the quality of
such Inventory) or consignment basis; (l) Accounts to the extent that the
Account Debtor's indebtedness to Borrower exceeds fifteen percent (15%)
(provided that such percentage shall be thirty percent (30%) in the case of
General Nutrition Center or WalMart) of the lesser of (i) the Revolving
Commitment then in effect or (ii) the aggregate Accounts then owing to Borrower;
(m) contra Accounts to the extent of the amount of the accounts payable owed by
Borrower to the Account Debtor; (n) Accounts with respect to which the Account
Debtor is located in New Jersey, Minnesota, Indiana, or any other state as to
which Agent hereafter give Borrower notice that such state denies creditors
access to its courts in the absence of a Notice of Business Activities Report or
other similar filing, unless Borrower has either qualified as a foreign
corporation authorized to transact business in such state or has filed a Notice
of Business Activities Report or similar filing with the applicable Governmental
Authority in such state for the then current year; (o) Accounts evidenced by
Chattel Paper or any Instrument of any kind, to the extent possession of such
Chattel Paper or Instrument is not granted to Agent and (p) Accounts which Agent
determines in good faith to be unacceptable.
SECTION 9.2 VERIFICATION OF ACCOUNTS. Agent shall have the right,
at any time or times hereafter, in the name of Borrower or a nominee of Agent,
or during the pendency of an Event of Default, in Agent's name, to verify with
Account Debtors the validity, amount or any other matter relating to any
Account, by mail, telephone, or in person.
SECTION 9.3 ELIGIBLE INVENTORY. "ELIGIBLE INVENTORY" shall consist
of all of the Inventory of Borrower, except the following: (a) work in process;
(b) Inventory which is damaged, obsolete, not in good condition, or not either
currently usable or currently saleable in the ordinary course of Borrower's
business as reasonably determined by Agent; (c) Inventory which Agent reasonably
determines, or which in accordance with Borrower's customary business practices,
is unacceptable due to age, type, category and/or quantity, including any
Inventory which is in excess of a one (1) year's supply or is otherwise
slow-moving; (d) Inventory with respect to which Agent does not have a first
and valid, fully perfected Lien; (e) Inventory consisting of packaging or
supplies; (f) Inventory in the possession of Borrower but not owned by
Borrower; (g) Inventory produced in violation of the Fair Labor Standards Act
and subject to the so-called "hot goods" provision contained in Title 29
U.S.C. Section 215(a)(1); (h) Inventory which is on consignment or is located
at a place other than the places of business and collateral locations of
Borrower listed on SCHEDULE 11.29; provided that, subject to SECTION 11.24,
in the case of leased or bailment locations listed on SCHEDULE 11.29, no
Inventory located at any such location shall be Eligible Inventory until the
applicable landlord or bailee has executed a lien waiver in form and
substance satisfactory to Agent, including Inventory in transit; (i)
Inventory consisting of finished goods which do not meet the specifications
of the purchase order for which such Inventory was produced; and (j)
Inventory which fails to meet the standards imposed by any governmental
agency, or department or division thereof, having regulatory authority over
such goods, their use and/or sale.
51
SECTION 9.4 SECURITY INTEREST. All of Borrower's Liabilities
constitute one (1) loan secured by Agent's Liens on the Collateral now or from
time to time hereafter granted by Borrower to Agent. To secure timely payment
and performance in full of the Liabilities, Borrower shall grant to Agent a
right of setoff against Property in the possession of Agent or any Lender and a
continuing Lien upon all of Borrower's right, title and interest in and to all
personal property and fixtures of Borrower and all other Collateral, whether now
owned or hereafter acquired by Borrower and wheresoever located.
SECTION 9.5 CONSIGNED INVENTORY. With respect to consigned
Inventory, Borrower shall and, as applicable, cause each Subsidiary to, perfect
its interest in such Inventory by filing and delivering notice to the creditors
of record of the consignee, all as provided in Section 9-114 of the UCC, and in
form and substance satisfactory to Agent, and Borrower shall execute and deliver
all financing statements, security agreements, amendments thereto, or other
documents (and pay the cost of filing or recording the same in all public
offices deemed necessary by Agent), as Agent may request, in a form satisfactory
to Agent, to perfect and maintain the Liens on such Collateral granted by
Borrower to Agent hereunder.
SECTION 9.6 COLLATERAL DOCUMENTS. Concurrently with or prior to
the making of the initial Loan, Borrower shall and, as applicable, cause each
Subsidiary to, execute and deliver to Agent the following: (a) Security
Agreements in the form of EXHIBIT E (as the same may be amended, modified or
supplemented from time to time, collectively called the "SECURITY AGREEMENTS"
and individually called a "SECURITY AGREEMENT"); (b) a Stock Pledge Agreement in
the form of EXHIBIT F (as the same may be amended, modified or supplemented from
time to time, the "STOCK PLEDGE AGREEMENT") covering all of Borrower's equity
interests in each Subsidiary and (c) the Intellectual Property Security
Agreement. At any time after the date hereof that a Subsidiary shall be formed
or acquired by Borrower, Borrower shall cause such Subsidiary to execute and
deliver to Agent a security agreement and a guaranty in form and substance
satisfactory to Agent with such changes therein as Agent may reasonably require,
together with such other documents, instruments and things as Agent may
reasonably require in connection therewith.
SECTION 9.7 SUBSEQUENTLY ACQUIRED PROPERTY. As further security
for the payment, performance and observance of the Liabilities, Borrower shall
so long as any of the Liabilities shall remain outstanding or any Lender shall
continue to have any Commitment: (a) acquire and maintain its property in a
manner which will enable Borrower to allow such property to become subject to
the Liens of the Collateral Documents; (b) obtain and maintain the consent or
approval of any Person whose consent or approval is required to the granting of
a Lien on any such property to or for the benefit of Agent; (c) execute and
deliver from time to time within ten (10) days after its purchase or acquisition
of any real property or leasehold interest in real property or of property
subject to a titling statute or of any other personal property, asset or other
right, amendments and supplements to the Collateral Documents in form and
substance, and together with other documents, satisfactory to Agent, and in such
number of counterparts as Agent may require, by which it shall (and only in the
event that such action shall be required in order to) pledge, mortgage and grant
a perfected Lien on such property, asset or right to Agent; (d) execute and
deliver
52
to Agent, in form and substance satisfactory to Agent and in such number of
counterparts as Agent may require, (i) an assignment of Borrower's rights
under any contract to construct any property with a fair market value in
excess of $100,000 promptly upon entering into such contract, and (ii) such
other agreements and instruments (including, without limitation,
acknowledgments by other contract parties) as may be necessary to xxxxx x
Xxxx on and security interest in Borrower's rights and interests under each
such contract and each such property, whether under construction or
otherwise, to Agent; and (e) execute and deliver to Agent, in form and
substance satisfactory to Agent and in such number of counterparts as Agent
may require, assignments of Borrower's rights under each lease to which
Borrower is a party as landlord or sublandlord, romptly upon entering into
such lease.
SECTION 9.8 CHANGE OF LOCATION OR NAME. Except as set forth in
Schedule 9.8, so long as any of the Liabilities shall remain outstanding or any
Lender shall continue to have any Commitment, Borrower shall not change (a) the
location of its principal place of business, chief executive office, major
executive office, chief place of business or its records concerning its business
and financial affairs, or (b) its name or the name under or by which it conducts
its business, in each case without first giving Agent and Lenders at least 30
days' advance written notice thereof and having taken any and all action
required or desirable by Agent to maintain and preserve the first perfected Lien
and security interest in favor of Agent on all property thereof free and clear
of any Lien whatsoever except for Permitted Liens; PROVIDED, HOWEVER, that
notwithstanding the foregoing, Borrower shall not change the location of its
principal place of business, chief executive office, major executive office,
chief place of business or its records concerning its business and financial
affairs to any place outside the contiguous continental United States of
America.
SECTION 9.9 DELIVERIES; FURTHER ASSURANCES. Borrower agrees that
it will, at its sole expense, (a) without any request by Agent or Lenders,
immediately deliver or cause to be delivered to Agent, in due form for transfer
(I.E., endorsed in blank or accompanied by duly executed undated blank stock or
bond powers), all securities, chattel paper, instruments and documents, if any,
at any time representing all or any of the Collateral, (b) upon the reasonable
request of Agent, furnish or cause to be furnished to Agent such surveys,
mortgagee title commitments or policies, appraisals, opinions of counsel and
other documents as Agent may specify, (c) without request by Agent, cause
Agent's Lien hereunder and under the Collateral Documents to be at all times
duly noted on any certificate of title issuable with respect to any of the
Collateral and forthwith deliver or cause to be delivered to Agent each such
certificate of title, and (d) execute and deliver, or cause to be executed and
delivered, to Agent in due form for filing or recording (and pay the cost of
filing or recording the same in all public offices reasonably deemed necessary
or advisable by Agent) such assignments (including, without limitation,
assignments of life insurance), security agreements, mortgages, deeds of trust,
pledge agreements, consents, waivers, financing statements, stock or bond
powers, and other documents, and do such other acts and things, all as may from
time to time be necessary or desirable to establish and maintain to the
satisfaction of Agent a valid first perfected Lien on and security interest in
all assets of Borrower now or hereafter existing or acquired (free of all other
Liens whatsoever other than Permitted Liens) to secure payment and performance
of the Liabilities.
53
SECTION 9.10 PERMITTED HZ DISPOSITION. It is acknowledged and
agreed by Borrower, Agent and each of the Lenders that, so long as no Event of
Default or Unmatured Event of Default has occurred and is continuing,
notwithstanding any provision of this Agreement or any Related Document to the
contrary, Borrower shall have the unencumbered right, at its discretion, to
consummate the Permitted HZ Disposition. None of the proceeds of any such
Permitted HZ Disposition shall constitute Excess Cash Flow.
SECTION 10 REPRESENTATIONS AND WARRANTIES.
To induce Lenders to enter into this Agreement and to make Loans hereunder,
Borrower represents and warrants to Lenders that:
SECTION 10.1 DUE ORGANIZATION, AUTHORIZATION, ETC. Each of Borrower
and its Subsidiaries is a corporation duly existing and in good standing under
the laws of the jurisdiction of its formation and is duly qualified and in good
standing in each jurisdiction where, because of the nature of its activities or
properties, such qualification is required or where the failure so to qualify
could have a Material Adverse Effect (which jurisdictions shall include, without
limitation, those jurisdictions listed on SCHEDULE 10.1). The execution,
delivery and performance by Borrower and each Subsidiary of the Related
Documents to which it is a party, and the consummation of the Related
Transactions, are within its corporate powers, have been duly authorized by all
necessary corporate action (including, without limitation, director and
shareholder approval, if required), have received all necessary governmental and
other consents and approvals and made all necessary filings with and given all
necessary notices to any governmental authority (if any shall be required), and
do not and will not contravene or conflict with, or create a Lien or right of
termination or acceleration under, any Requirement of Law or Contractual
Obligation binding upon it. This Agreement and each of the other Related
Documents to which Borrower and each Subsidiary is a party are (or when executed
and delivered will be) the legal, valid, and binding obligations of such Persons
enforceable against such Persons in accordance with their respective terms,
except as limited by applicable bankruptcy, reorganization, insolvency or
similar laws affecting the enforcement of creditors' rights generally and except
as limited by general principles of equity.
SECTION 10.2 CERTAIN AGREEMENTS. Borrower has furnished to Lenders
true, correct and complete copies of each of the Related Documents (including
all schedules and written disclosures in connection therewith). All warranties
of Borrower and, to Borrower's knowledge, all warranties of the other parties
thereto (other than Agent, Lenders and the Master Account Bank) set forth in the
Related Documents are true and correct in all material respects without any
waiver or modification thereof and no default of Borrower or any Subsidiary and,
to Borrower's knowledge, no default of any other party, exists thereunder.
SECTION 10.3 FINANCIAL INFORMATION; FINANCIAL CONDITION. All
balance sheets and all statements of operations, of shareholders' equity and of
changes in financial position, and other financial data (other than projections)
which have been or shall hereafter be furnished to
54
Lenders by or on behalf of Borrower for the purposes of or in connection with
this Agreement, the Related Documents or the Related Transactions (including
the financial information referred to below, except for the projections
referred to in CLAUSES (c) and (d) below) and the notes thereto, except as
disclosed in the notes to such financial statements, have been and will be
prepared in accordance with GAAP consistently applied throughout the periods
involved and do and will present fairly the financial condition of the
entities involved as of the dates thereof and the results of their operations
for the periods covered thereby (subject, in the case of interim financial
statements, to normal recurring year-end adjustments and the absence of
footnotes). All projections (including, without limitation, the projections
described in CLAUSES (c) and (d) below) which have been or shall be furnished
to Lenders for purposes of or in connection with this Agreement, the Related
Documents or the Related Transactions have represented and will, when
delivered to Lenders, represent management's best estimates of future
performance, based upon historical financial information and reasonable
assumptions of management. Such financial data includes, without limitation,
the following financial statements and reports which have been furnished to
Agent or Lenders on or prior to the date hereof:
(a) the audited balance sheet of Borrower as of December 31,
1998, and the related audited statements of earnings, shareholders' equity,
cash flow and changes in financial position of Borrower on a consolidated
basis for the year ending on such date (the "FINANCIALS");
(b) the balance sheet of Borrower and HZ Sub on a consolidated
basis as of March 31, 1999 and the related statements of income and cash
flow of Borrower and HZ Sub on a consolidated basis for the 3 month period
ending on such date;
(c) the pro forma balance sheet of Borrower and HZ Sub on a
consolidated basis as of March 31, 1999 after giving effect to all Related
Transactions (the "PRO FORMA");
(d) the projected balance sheets and projected statements of
earnings and cash flow for Borrower on a consolidated basis for each Fiscal
Quarter from the Closing Date through December, 2001 and for each Fiscal
Year through the Fiscal Year ending December 31, 2004.
There has been no material adverse change since March 31, 1999 in the financial
condition, operations, assets or business of Borrower from that reflected in the
financial information Borrower referred to in CLAUSE (b) of this SECTION 10.3.
SECTION 10.4 LITIGATION AND CONTINGENT OBLIGATIONS. Except as set
forth in SCHEDULE 10.4 hereto (including estimates of the dollar amounts
involved) and except for claims as to which the insurer has admitted coverage in
writing and which are fully covered by insurance, no claims, litigation
(including, without limitation, derivative actions and litigation with respect
to any Employee Benefit Plan), arbitration, governmental investigation or
proceeding or inquiry is
55
pending or, to the best of Borrower's knowledge, threatened against Borrower,
any member of the Controlled Group or any Employee Benefit Plan fiduciaries
(i) which is reasonably likely to, if adversely determined, have a Material
Adverse Effect, or (ii) which relates to any of the Related Transactions,
and, except as set forth in SCHEDULE 10.4, there is no basis known to
Borrower for any of the foregoing. Other than any liability incident to such
claims, litigation or proceedings, neither Borrower nor any Subsidiary has
any material Contingent Obligations not provided for or referred to in the
Financials or in SCHEDULE 10.4. The matters described on SCHEDULE 10.4, if
adversely determined, are not reasonably likely to have a Material Adverse
Effect.
SECTION 10.5 LIENS. None of the assets of Borrower or any
Subsidiary will be subject to any Lien, except for Permitted Liens. Except as
described in SCHEDULE 10.5, Agent will obtain, as security for the Liabilities,
(a) a legally valid and binding first mortgage Lien on all real property and
interests in real property now owned or hereafter acquired by Borrower and its
Subsidiaries, and (b) a first priority perfected Lien on all other Property
described in the Collateral Documents as being pledged, assigned or granted
thereby. The descriptions of other property described in the Collateral
Documents correctly describe all Property used in the business or operations of
Borrower and its Subsidiaries in a manner sufficient to create an enforceable
Lien on such Property.
SECTION 10.6 CONTRACTS; ABSENCE OF DEFAULT. Except as set forth on
Schedule 10.6, neither Borrower nor any Subsidiary is in material default under
any Contract or other contracts (a) to which it is a party or by which it is
bound, and (b)(i) pursuant to which Borrower or any Subsidiary provides goods or
services to one or more customers which contributed more than 1% of its gross
revenue during the prior Fiscal Year of Borrower or which is reasonably expected
to contribute more than 1% of its gross revenue during the current or any future
Fiscal Year of Borrower (each, a "MATERIAL CONTRACT"), (ii) pursuant to which
Borrower or any Subsidiary incurs or is committed to incur Lease Obligations in
excess of $50,000 during any Fiscal Year, (iii) which cannot be replaced without
material expense, delay or interruption of business (including, without
limitation, any Material Intellectual Property Right), or (iv) where such
default could have a Material Adverse Effect. A list of all Material Contracts
existing on the date hereof is attached hereto as SCHEDULE 10.6. Except as set
forth on Schedule 10.6, neither Borrower nor any Subsidiary has received notice
that any Material Contract will be terminated or not extended or renewed.
SECTION 10.7 EMPLOYEE BENEFIT PLANS. (a) Neither Borrower nor any
member of its Controlled Group have incurred any liability with respect to any
Pension Plan other than to pay premiums to the PBGC and make required
contributions to such Pension Plans (provided that any such contributions and
premiums which are due have been paid).
(b) With respect to any Employee Benefit Plan, full and timely
payment has been made of all amounts required under Section 412 of the Code,
Section 302 of ERISA or under the terms of each such Plan, no event or condition
has occurred which has or could result in the imposition of a lien or an
accumulated funding deficiency (whether or not waived) under Section 412 of the
Code or Section 302 of ERISA, Borrower and each current or past member of its
56
Controlled Group have fulfilled their obligations, if any, under the minimum
funding standards of ERISA and the Code, and no security has been posted or is
required to be posted under Section 401(a)(29) of the Code or Section 307 of
ERISA.
(c) No steps have been taken to terminate, or withdraw from, any
Pension Plan or any Multiemployer Plan.
(d) No Reportable Event has occurred.
(e) Neither Borrower nor any member of its Controlled Group has any
contingent liability with respect to any post-retirement benefits under a
Welfare Plan (other than liability for health care continuation coverage in
compliance with the requirements of Part 6 of Subtitle B of Title I of ERISA or
Section 4980B of the Code).
(f) All Employee Benefit Plans (i) comply in form with any
requirements of ERISA and have been operated and administered in compliance with
their terms and in a manner so as not to result in any liability to Borrower or
any current or past member of its Controlled Group for failure to comply with
ERISA and all of the applicable statutes and regulations issued thereunder, and
(ii) if intended to qualify under the Code, are in a form and have been
administered in a manner so as not to result in any liability to Borrower or any
current or past member of its Controlled Group for failure to comply with the
applicable provisions thereof and are subject to an Internal Revenue Service
determination with respect to such qualification. Except for future funding
obligations, no conditions exist or events or transactions have occurred with
respect to any Employee Benefit Plan which could result in the incurrence by
Borrower or any current or past member of the Controlled Group of any liability,
except to the extent the same (x) have been funded or adequately reserved on the
balance sheet of Borrower, or (y) will not result in the incurrence of any
liability by Borrower or any current or past member of its Controlled Group in
excess of $50,000 in the aggregate.
(g) Neither Borrower nor any Subsidiary is an Employee Benefit Plan.
Neither Borrower's nor any Subsidiary's assets constitute assets of an Employee
Benefit Plan. The execution, performance and delivery of this Agreement and the
Related Documents and the consummation of the Related Transactions will not
involve any prohibited transaction, as defined in Section 406 of ERISA or
Section 4975 of the Code, for which an exemption is unavailable.
SECTION 10.8 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. Neither Borrower nor any Subsidiary is an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
SECTION 10.9 REGULATIONS U AND X. Neither Borrower nor any
Subsidiary is engaged principally, or as one of its important activities, in the
business of extending credit for
57
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U or X of the Board of Governors of the Federal Reserve System).
None of Borrower or any Affiliate of Borrower or any Person acting on behalf
of Borrower or any of its Affiliates has taken or will take action to cause
the execution, delivery or performance of this Agreement or the Notes, or the
other Related Documents, the making or existence of the Loans or the use of
proceeds of the Loans to violate Regulation U or X of the Board of Governors
of the Federal Reserve System.
SECTION 10.10 PROCEEDS. The proceeds of the Loans will be used for
working capital and capital expenditure purposes, except that proceeds of the
Term Loans and the initial Revolving Loan shall be used to refinance the
Indebtedness to be Refinanced.
SECTION 10.11 CONFIRMATION OF WARRANTIES. All representations and
warranties of Borrower and its Subsidiaries and, to Borrower's knowledge, each
other party (other than Agent or Lenders) to the Related Documents set forth in
the Related Documents are true and correct in all material respects (except for
those representations and warranties that are stated to be made only as of a
specific date which shall be true and correct in all material respects only as
of such date).
SECTION 10.12 INSURANCE. SCHEDULE 10.12 hereto sets forth a true and
correct summary of all insurance carried by Borrower and its Subsidiaries. Each
of Borrower and its Subsidiaries is adequately insured for its benefit under
policies issued by insurers of recognized responsibility. No notice of any
pending or threatened cancellation has been received by Borrower or any
Subsidiary with respect to any of such insurance policies. Borrower and its
Subsidiaries are in compliance with all conditions contained in such insurance
policies.
SECTION 10.13 MATERIAL DISRUPTIONS. Neither the business nor the
properties of Borrower or any Subsidiary is affected, or anticipated to be
affected, by any existing event of Force Majeure or other existing casualty
which is reasonably likely to have a Material Adverse Effect.
SECTION 10.14 PATENTS, TRADEMARKS, ETC. Each of Borrower and its
Subsidiaries owns and possesses, or is licensed under valid and enforceable
license agreements, or is otherwise entitled to use without payment, all such
patents, patent rights, trademarks, trademark rights, trade names, trade name
rights, service marks, service xxxx rights, trade secrets, mask works and
copyrights as are necessary for the conduct of its business as now conducted or
presently proposed to be conducted without any infringement upon rights of
others which is reasonably likely to have a Material Adverse Effect, and, except
as set forth in Part 1 of SCHEDULE 10.14, there is no Intellectual Property the
loss of which is reasonably likely to have a Material Adverse Effect (any such
item, whether or not set forth on SCHEDULE 10.14, being herein called a
"MATERIAL INTELLECTUAL PROPERTY RIGHT"). Parts 1 and 2 of SCHEDULE 10.14
together contain a complete list of all license agreements relating to
Intellectual Property held by Borrower and its Subsidiaries under license
agreements.
58
SECTION 10.15 OWNERSHIP OF PROPERTIES; PROPERTY SCHEDULE. Borrower
has good and marketable title to all of its properties and assets, real and
personal, of any nature whatsoever. SCHEDULE 10.15 contains descriptions of all
real and personal property (a) in which Borrower has an interest as of the date
hereof, (b) with respect to which the Collateral Documents will not create a
valid and perfected first lien and security interest, and (c) which cannot be
replaced without material expense, delay or interruption of business.
SECTION 10.16 BUSINESS LOCATIONS; TRADE NAMES. SCHEDULE 10.16 lists
each of the locations where Borrower and each Subsidiary maintains an office, a
place of business or any records or has maintained an office, a place of
business or any records at any time during the five year period prior to the
Closing Date and, except as described in SCHEDULE 10.16 none of such locations
have changed within the six (6) month period prior to the Closing Date; and
SCHEDULE 10.16 also lists each corporate, trade, fictitious or other name under
or by which Borrower and each Subsidiary conducts its business or has conducted
business at any time during the five year period prior to the Closing Date and a
complete and accurate address and legal description of each parcel of real
estate owned or leased by Borrower and each Subsidiary and the principal place
of business and chief executive office of Borrower and each Subsidiary. The
books and records of Borrower and each Subsidiary and all Chattel Paper,
Instruments and all records of account of Borrower and each Subsidiary are
located and hereafter shall continue to be located at the principal place of
business and chief executive office of such Person.
SECTION 10.17 ACCURACY OF INFORMATION. All factual information
heretofore or contemporaneously herewith furnished by or on behalf of Borrower
and each Subsidiary to any one or more of Agent and Lenders for purposes of or
in connection with this Agreement or any transaction contemplated hereby is, and
all other such factual information hereafter furnished by or on behalf of
Borrower and each Subsidiary to any one or more of Agent and Lenders will be,
true and accurate in every material respect on the date as of which such
information is dated or certified and does not omit and will not omit to state
any material fact necessary to make such information not misleading in light of
the circumstances under which such statements were or will be made.
SECTION 10.18 SUBSIDIARIES. Except as set forth on SCHEDULE 10.18,
Borrower has no Subsidiaries. SCHEDULE 10.18 contains an accurate list of all
Subsidiaries of Borrower, setting forth their respective jurisdictions of
incorporation, the percentages of their capital stock owned by Borrower or other
Subsidiaries and a description of each class of its authorized capital stock and
the number of shares of each class issued and outstanding. Each Subsidiary has
all necessary corporate power to carry on its present business. All of the
outstanding shares of capital stock of or other equity interest in each
Subsidiary are validly issued and outstanding and fully paid and nonassessable,
and all shares or other equity interests in each Subsidiary set forth on
SCHEDULE 10.18 are owned, beneficially and of record, by Borrower free and clear
of all Liens other than the Lien of Agent. There are no outstanding commitments
or other obligations of any Subsidiary to issue, and no options, warrants or
other rights of any Person to acquire, any shares of any class of capital stock
of or other equity interest in any Subsidiary. Except as set forth on SCHEDULE
10.18, no Subsidiary has any material assets or liabilities.
59
SECTION 10.19 HAZARDOUS MATERIALS. Except as disclosed in SCHEDULE
10.19 hereto, (a) neither Borrower or any Subsidiary nor, to Borrower's
knowledge, any other Person has ever caused or permitted any Hazardous Material
to be released, treated, stored or disposed of in a manner which could form the
basis for any claim, demand, proceeding or action by any Person, past, present
or future on, under or at any real property legally or beneficially owned (or
any interest or estate in real property which is owned) or operated by Borrower
or any Subsidiary (including, without limitation, any property owned by a land
trust the beneficial interest in which is owned in whole or in part by Borrower
or any Subsidiary), (b) no such real property has ever been used (by Borrower or
any Subsidiary or, to Borrower's knowledge, any other Person) as (i) a disposal
site for any Hazardous Material or (ii) a permanent storage site for any
Hazardous Material, (c) to Borrower's knowledge no asbestos containing
materials, polychlorinated biphenyls or underground storage tanks are or have
been located in, on or under real property owned or operated by Borrower or any
Subsidiary, (d) there are no environmental Liens attached or, to Borrower's
knowledge, threatened, to real property owned or operated by Borrower or its
Subsidiaries, and (e) neither Borrower or any Subsidiary nor, to Borrower's
knowledge, any of their respective predecessors or its Affiliates, has ever
caused or permitted any Hazardous Material to be transported, released, treated,
stored or disposed of at any location other than those identified in SCHEDULE
10.19 in a manner which could form the basis for any claim, demand, proceeding
or action by any Person. The matters described on SCHEDULE 10.19, if adversely
determined, are not reasonably likely to have a Material Adverse Effect.
SECTION 10.20 AGENT'S FEES. Except as disclosed on SCHEDULE 10.20,
no agent, broker, investment banker, Person, or firm acting on behalf of
Borrower or Affiliates of Borrower, or under the authority of any such Person,
is or will be entitled to any broker's or finder's fee or any other commission
or similar fee, directly or indirectly, from any of the parties hereto in
connection with any of the transactions contemplated herein.
SECTION 10.21 TAXES. Each of Borrower and its Subsidiaries has filed
all tax returns that are required to be filed by it or on behalf of any Employee
Benefit Plan, and has paid or provided adequate reserves for the payment of all
taxes, including, without limitation, all payroll taxes and federal and state
withholding taxes, and all assessments payable by it that have become due, other
than those that are not yet delinquent or that are disclosed on SCHEDULE 10.21
and are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP. There is no ongoing audit or, to
Borrower's knowledge, other governmental investigation of the tax liability of
Borrower or any Subsidiary or any Employee Benefit Plan and there is no
unresolved claim by a taxing authority concerning Borrower's or any Subsidiary's
tax liability (or by any governmental authority with respect to any Employee
Benefit Plan), for any period for which returns have been filed or were due. As
used in this SECTION 10.21, the term "taxes" includes all taxes of any nature
whatsoever and however denominated, including, without limitation, excise,
import, governmental fees, duties and all other charges, as well as additions to
tax, penalties and interest thereon, imposed by any government or
instrumentality, whether federal, state, local, foreign or other.
60
SECTION 10.22 SECURITIES LAWS. None of Borrower, its Subsidiaries or
its Affiliates, nor anyone acting on behalf of any such Person, has directly or
indirectly offered any interest in the Notes or any other Liability for sale to,
or solicited any offer to acquire any such interest from, or has sold any such
interest to any Person that would subject the issuance or sale of the Notes or
any other Liability to registration under the Securities Act of 1933, as
amended.
SECTION 10.23 GOVERNMENTAL AUTHORIZATIONS. Borrower and its
Subsidiaries have all licenses, franchises, permits and other governmental
authorizations necessary for all businesses carried on by it (including owning
and leasing the real and personal property owned and leased by it), except where
failure to obtain such licenses, franchises, permits and other governmental
authorizations (a) is not related to any use, manufacture, generation, storage,
transport, release or disposal by any such Person of any Hazardous Material, and
(b) is not reasonably likely to (i) subject any such Person or any of its
officers to criminal liability or (ii) have a Material Adverse Effect.
SECTION 10.24 COMPLIANCE WITH LAWS. Each of Borrower and its
Subsidiaries: (a) is in compliance in all material respects with all laws,
ordinances, rules, regulations, orders, policies, guidelines or other
requirements of any Governmental Authority, including Environmental Laws, (b)
has obtained and is in compliance with all material permits, certificates,
licenses, approvals and authorizations required under Environmental Laws
necessary for its operations and have filed all required notifications or
reports relating to chemical substances, air emissions, effluent discharges and
storage, treatment and disposal of Hazardous Materials, (c) has filed in a
timely manner all reports, documents and other materials required to be filed by
it with any Governmental Authority (and the information contained in each of
such filings is true, correct and complete in all material respects), except
where failure to make such filings is not related to the manufacture, use,
generation, release, storage, transport or disposal of any Hazardous Material by
such Person and is not reasonably likely to have a Material Adverse Effect and
(d) has retained all records and documents required to be retained by it
pursuant to any law, ordinance, rule, regulation, order, policy, guideline or
other requirement of any Governmental Authority, except where failure to retain
such records is not related to the use, manufacture, generation, release,
storage, transport or disposal of any Hazardous Material and is not reasonably
likely to subject such Person or any of its officers to criminal liability or
have a Material Adverse Effect.
SECTION 10.25 EMPLOYEES AND LABOR. There is no unfair labor
practice complaint against Borrower or any Subsidiary pending before the
National Labor Relations Board or any state or local agency nor is there any
labor strike, other labor dispute or work stoppage, pending or, to Borrower's
knowledge, threatened affecting Borrower or any Subsidiary which if adversely
resolved is reasonably likely to have a Material Adverse Effect; there is no
existing representation question respecting the employees of Borrower or any
Subsidiary, nor, to Borrower's knowledge, are there organizational attempts
affecting any of the employees of Borrower or any Subsidiary which is
reasonably likely to have a Material Adverse Effect; and there is no
grievance pending or, to Borrower's knowledge, threatened affecting Borrower
or any Subsidiary which is
61
reasonably likely to have a Material Adverse Effect. Neither Borrower nor
any Subsidiary is a party to any collective bargaining agreements, except as
listed on SCHEDULE 10.25 hereto. To Borrower's knowledge, no customer or
supplier of Borrower or any Subsidiary is involved in, or threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding which is reasonably likely to have a Material Adverse Effect.
SECTION 10.26 [INTENTIONALLY OMITTED]
SECTION 10.27 SOLVENCY. Borrower is, and after giving effect to the
execution and delivery of this Agreement and any of the other Related Documents
to which it is a party and consummation of the transactions contemplated
hereunder or thereunder, including, without limitation, the Related
Transactions, will be, solvent.
SECTION 10.28 COLLATERAL. Except for the Permitted Liens, all of the
Collateral is and will continue to be owned by Borrower free and clear of all
Liens. From and after the making of the first Loan and after the making of all
necessary filings, the provisions of the Collateral Documents will be effective
to create and will give Agent as security for the repayment of the Liabilities,
a legal, valid, perfected and enforceable Lien (which priority is subject only
to Permitted Liens) upon all right, title and interest of Borrower and its
Subsidiaries (except for HZ Sub) in any and all of the Collateral (including the
Lien in the items and amounts deposited in the Operating Accounts and the
Depositary Accounts). Upon the acknowledgment of Agent's security interest in
the Depositary Accounts by the banks or other financial institutions at which
such Depositary Accounts are maintained, this Agreement will be effective to
create and will give Agent as security for the repayment of the Liabilities, a
legal, valid, perfected and enforceable first priority Lien on all deposits or
other items in the Depositary Accounts.
SECTION 10.29 REAL ESTATE. SCHEDULE 10.29 describes all Real Estate
owned or leased or otherwise occupied by Borrower. Borrower represents and
warrants to Lender that Borrower has good, indefeasible and merchantable title
to and ownership of, or a valid leasehold interest in, each parcel of Real
Estate described in SCHEDULE 10.29, free and clear of all Liens, except Liens in
favor of Agent and the Permitted Liens. To Borrower's knowledge, no parcel of
its Real Estate is subject to any boundary or encroachment dispute, special
assessment, condemnation or eminent domain proceeding, restrictive covenant,
zoning or building code violation or any other dispute, assessment, claim or
violation of law which might restrict or interfere with Borrower's use of such
parcel of Real Estate in the ordinary course of Borrower's business or which is
reasonably likely to have a Material Adverse Effect.
SECTION 10.30 RETAIL SALES. Borrower's retail merchant sales of
goods for personal, family or household purposes did not exceed 25% of its total
sales of all goods during the most recent twelve month period.
SECTION 11 COVENANTS.
62
Until the expiration or termination of the Commitments and thereafter
until the Notes and all other Liabilities are paid and performed in full,
Borrower agrees that, unless at any time the Required Lenders shall otherwise
expressly consent in writing, it will:
SECTION 11.1 REPORTS, CERTIFICATES AND OTHER INFORMATION. Furnish
or cause to be furnished to Agent and each Lender:
(a) BORROWING BASE CERTIFICATE. On or before the twentieth (20th)
day of each calendar month, a Borrowing Base Certificate determined as of the
last day of the immediately preceding calendar month in form satisfactory to
Agent and certified by the Chief Financial Officer, Controller or other
comparable officer of Borrower. Unless otherwise updated by Borrower and
accepted by Agent, the Borrowing Base shall be conclusively presumed to be equal
at any time to the Borrowing Base as reported in the most recently submitted
Borrowing Base Certificate.
(b) ANNUAL REPORT. As soon as available, but in any event within 105
days after the end of each Fiscal Year of Borrower: (i) copies of the balance
sheet of Borrower and its Subsidiaries on a consolidated basis as at the end of
such Fiscal Year and the related statements of earnings, shareholders' equity
and cash flows for such Fiscal Year, in each case setting forth in comparative
form the figures for the previous year and, as prepared by Borrower, in the
current business plan and containing a narrative discussion by Borrower of
variances reflected by such comparisons, prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected
therein, certified, without a going concern or like qualification or
qualification arising out of the scope of the audit, by Xxxxxx Xxxxxxxx LLP (or
such other independent certified public accountants of recognized standing
selected by Borrower and reasonably satisfactory to Agent) (each such report, an
"ANNUAL REPORT"); and (ii) a certificate from the accountants identified in
CLAUSE (i) of this SECTION 11.1(b) containing a computation of, and showing
compliance with, each of the financial ratios and restrictions contained in this
SECTION 11, and to the effect that, in making the examination necessary for the
signing of the annual report of Borrower by such accountants, they have not
become aware of any non-compliance by Borrower or any Subsidiary with this
Agreement or any Related Document or any Event of Default or Unmatured Event of
Default.
(c) QUARTERLY REPORTS. As soon as available, but in any event within
50 days after the end of each fiscal quarter of Borrower and its Subsidiaries
copies of the unaudited balance sheet of Borrower and its Subsidiaries on a
consolidated basis as at the end of such fiscal quarter and the related
unaudited statements of earnings, shareholders' equity and cash flows for such
fiscal quarter and the portion of the Fiscal Year through such fiscal quarter,
in each case setting forth in comparative form the figures for the corresponding
periods of the previous Fiscal Year and in the current business plan and
containing a narrative discussion of variances reflected by such comparisons,
prepared in reasonable detail and in accordance with GAAP applied consistently
throughout the periods reflected therein, accompanied by a "management letter"
containing a narrative discussion of such financial statements and certified by
the chief financial officer of Borrower as presenting fairly the financial
condition and results of operations of Borrower and its Subsidiaries on a
consolidated basis (subject to normal year-end audit adjustments).
63
(d) MONTHLY REPORTS. As soon as available, but in any event within
30 days after the end of each month (which is not the end of a fiscal quarter of
Borrower), copies of the unaudited balance sheet of Borrower and its
Subsidiaries on a consolidated basis as at the end of such month and the related
unaudited statements of earnings and cash flows for such month and the portion
of the Fiscal Year through such month, in each case setting forth in comparative
form the figures for the corresponding periods of the previous Fiscal Year,
prepared in reasonable detail and in accordance with GAAP applied consistently
throughout the periods reflected therein and certified by the chief financial
officer of Borrower as presenting fairly the financial condition and results of
operations of Borrower and its Subsidiaries (subject to normal year-end audit
adjustments; PROVIDED, HOWEVER, prior to October, 1999 the monthly financial
information required to be provided by Borrower shall be limited to sales and
contribution margin of Borrower).
(e) BUSINESS PLAN. As soon as available, but in any event within 30
days after the beginning of each Fiscal Year of Borrower, a copy of the plan and
forecast (including a projected balance sheet, income statement and funds flow
statement and amount of the Revolving Commitment and Borrowing Availability) of
Borrower and its Subsidiaries for the current Fiscal Year in quarterly detail.
(f) COMPLIANCE CERTIFICATE AND MANAGEMENT REPORTS. Contemporaneously
with the furnishing of each set of financial statements provided for in SECTIONS
11.1(b) and 11.1(c), a duly completed certificate in substantially the form of
EXHIBIT G or in such other form as Agent may from time to time require (each a
"COMPLIANCE CERTIFICATE"), signed by the chief financial officer of Borrower,
containing, among other things, a computation of, and showing compliance with,
each of the applicable financial ratios and restrictions contained in this
SECTION 11 and to the effect that as of such date no Event of Default or
Unmatured Event of Default has occurred and is continuing or if such an Event of
Default or Unmatured Event of Default has occurred and is continuing, setting
forth the nature thereof and the actions Borrower is taking with respect
thereto.
(g) AUDITORS' MATERIALS. Promptly upon receipt thereof, copies of
all financial and management reports regarding Borrower and its Subsidiaries,
submitted to Borrower, any Subsidiary or any shareholder of Borrower or any
Subsidiary by independent public accountants in connection with each annual or
interim audit report made by such accountants of the books of Borrower.
(h) REPORTS TO SEC. Promptly upon the filing or furnishing thereof,
copies of all regular and periodic reports, proxy statements, financial
statements, registration statements, prospectuses and other material filed by
Borrower or any Subsidiary (or, upon Borrower becoming aware thereof, such
material filed with respect to Borrower or any Subsidiary or their securities,
e.g., a Schedule 13D or Schedule 13G filed under the Securities Exchange Act of
1934 as to Borrower's capital stock by a stockholder thereof) with or to any
securities exchange or the Securities and Exchange Commission or any other
Governmental Authority or distributed to the stockholders of any such Person and
all press releases and other statements made available by Borrower or any
64
Subsidiary to the public concerning material adverse changes or developments in
the business of any such Person.
(i) NOTICE OF DEFAULT, LITIGATION, INTELLECTUAL PROPERTY AND ERISA
MATTERS. Forthwith upon Borrower learning of the occurrence of any of the
following, written notice thereof, describing the same and the steps being taken
by Borrower, any Subsidiary or any other party with respect thereto: (i) the
occurrence of an Event of Default or an Unmatured Event of Default, (ii) the
institution of, or any adverse determination or materially adverse development
in, any litigation, arbitration proceeding or governmental proceeding which
could have a Material Adverse Effect, (iii) the occurrence of a Reportable
Event, (iv) the institution of any steps to terminate any Pension Plan, (v) the
institution of any steps to completely or partially withdraw from any
Multiemployer Plan, (vi) the failure of Borrower or any current or past member
of its Controlled Group to make a required contribution to any Pension Plan if
such failure is sufficient to give rise to a Lien under Section 412 of the Code
or Section 302 of ERISA, (vii) the adoption of any amendment which would require
Borrower or any current or past member of its Controlled Group to provide a bond
or other security to a Pension Plan under Section 401(a)(29) of the Code or
Section 307 of ERISA, (viii) the incurrence of any increase in the contingent
liability of Borrower or any member of its Controlled Group or any other
conditions, events or transactions with respect to any present (or future)
Employee Benefit Plan which (A) is not adequately reserved on the balance sheet
of Borrower or one of its Controlled Group members and (B) could result in the
incurrence by Borrower or any member of its Controlled Group of any liability in
excess of $50,000 (in the aggregate), (ix) the commencement of any dispute which
might lead to the modification, transfer, revocation, suspension or termination
of any Related Document, (x) any termination (without renewal), loss, suspension
or other impairment of Borrower's or any Subsidiary's rights under any Material
Intellectual Property Right or Material Contract or any expectation of any such
termination, loss, supension or other impairment, (xi) any other material
adverse change in a Material Contract, or (xii) any other event or events which
could have a Material Adverse Effect.
(j) INSURANCE REPORTS. (i) Within 90 days after the end of each
Fiscal Year, a certificate signed by its chief financial officer that summarizes
the insurance policies carried by Borrower (such certificate to be in form and
substance satisfactory to Agent), and (ii) written notification 30 days prior to
any cancellation or material change (other than one which enlarges the scope of
coverage, adds additional insureds or increases coverage limits) of any such
insurance by Borrower and within 5 days after receipt of any notice (whether
formal or informal) of cancellation, reduction in coverage, or shortening of
policy period or material adverse change by any of its insurers.
(k) WITHDRAWAL LIABILITY. With respect to each "Multiemployer Plan",
as defined in section 4001 of ERISA as to which Borrower or any current or past
member of its Controlled Group may have any liability, (i) no less frequently
than annually, a written estimate (which shall be based on information received
from each such plan, it being expressly understood that Borrower shall take all
reasonable steps to obtain such information) of the withdrawal liability that
would be incurred by Borrower or any current or past member of its Controlled
Group in the event that
65
Borrower or any current or past member of its Controlled Group were to
completely withdraw from that plan in a complete withdrawal as defined in
Section 4201 of ERISA, and (ii) written notice thereof, as soon as it has
reason to believe (on the basis of the most recent information available to
it) that the sum of (a) the withdrawal liability that would be incurred by
Borrower or any current or past member of its Controlled Group if Borrower or
any current or past member of its Controlled Group completely withdrew from
any Multiemployer Plans as to which Borrower of any current or past member of
its Controlled Group has an obligation to contribute, and (b) the amount of
the outstanding withdrawal liability (without unaccrued interest) incurred by
Borrower of any current or past member of its Controlled Group to
Multiemployer Plans, would exceed $50,000 in the aggregate.
(l) PURCHASE AND SALE AGREEMENTS. Prompt written notice of execution
of any agreement by Borrower or any Subsidiary to merge or consolidate into or
with, or purchase or otherwise acquire all or substantially all of the assets or
stock of any class of, or any partnership or joint venture interest in, any
other Person, or for the sale, transfer, lease or conveyance by Borrower or any
Subsidiary of all or any substantial part of its assets or sale or assignment
without recourse of any of its receivables.
(m) LIST OF OFFICERS AND DIRECTORS. (i) Not more than 10 Business
Days after each anniversary date of the initial Loan, a complete list of the
officers and directors of Borrower, (ii) within 15 Business Days of any change
in the information provided pursuant to the foregoing CLAUSE (i), written notice
of such change, and (iii) copies of all amendments to any shareholder's
agreement made during the prior year.
(n) TAX RETURNS. Within: (i) 30 days after the filing thereof,
copies of all income tax returns filed by Borrower or any Subsidiary with any
Federal or state taxing authority; and (ii) 30 days after receipt thereof by
Borrower or any Subsidiary, evidence of payment of property taxes.
(o) SHAREHOLDER INFORMATION. As soon as practicable but in any event
within 5 days after Borrower becomes aware of any Change of Control, notice
thereof.
(p) OTHER INFORMATION. From time to time, such other information
concerning Borrower or any Subsidiary as Agent may reasonably request.
SECTION 11.2 CORPORATE EXISTENCE; FOREIGN QUALIFICATION. Do and
cause to be done at all times all things necessary to (a) maintain and preserve
the corporate existence of Borrower and each Subsidiary, (b) be duly qualified
to do business and in good standing as a foreign corporation in each
jurisdiction where the nature of its business makes such qualification
necessary, except any such jurisdiction where failure to so qualify could not
have a Material Adverse Effect (which jurisdictions shall include, without
limitation, those jurisdictions listed in SCHEDULE 10.1) and (c) comply with all
Contractual Obligations and Requirements of Law binding upon Borrower and each
Subsidiary, except to the extent that the failure to comply therewith is not
reasonably likely to have a Material Adverse Effect.
66
SECTION 11.3 BOOKS, RECORDS AND INSPECTIONS. Maintain, and cause
each Subsidiary to maintain, complete and accurate books and records. In
addition, Agent and each Lender, or any Person designated by Agent and each
Lender in writing, shall have the right, from time to time hereafter, to call at
Borrower's place or places of business (or any other place where the Collateral
or any information relating thereto is kept or located) during normal business
hours upon reasonable prior written or telephonic notice by Agent and each
Lender or such other Person; PROVIDED that no prior notice shall be required
upon the occurrence and during the continuance of an Event of Default or
Unmatured Event of Default, and, without hindrance or delay (a) to inspect,
audit, check and make copies of and extracts from Borrower's books, records,
journals, orders, receipts and any correspondence and other data relating to
Borrower's or any Subsidiary's business or to any transactions between the
parties hereto, (b) to make such verification concerning the Collateral as Agent
or the Required Lenders may consider reasonable under the circumstances, and (c)
to discuss the affairs, finances and business of Borrower or any Subsidiary with
any officers, employees or directors of Borrower and its Subsidiaries.
SECTION 11.4 INSURANCE. (a) If Borrower maintains "key man"
insurance with respect to any officer or director of Borrower, Borrower shall
assign the proceeds of such insurance to Agent pursuant to an assignment in form
and substance reasonably satisfactory to Agent, (b) maintain, and cause each
Subsidiary to maintain liability, property damage and casualty insurance with
financially sound and reputable insurance companies reasonably satisfactory to
Agent (i) as may be required by law, or by the Collateral Documents or otherwise
by Agent or any Lender, and (ii) in any event to such extent and against such
hazards and liabilities, as is customarily maintained by prudent companies
similarly situated, (c) maintain, and cause each Subsidiary to maintain, a
sufficient amount of insurance so that neither Borrower or any Subsidiary nor
Agent or any Lender will be considered a co-insurer or co-insurers, (d) with
respect to each liability insurance policy, (i) cause such policy to provide,
pursuant to endorsements in form and substance satisfactory to Agent, that Agent
is named as an additional insured and that the insurer will give Agent 30 days
prior written notice of the termination or other material modification of such
policy and (ii) notify Agent within 5 days after obtaining any new policy, or
increasing coverage under any existing policy, describing in detail in such
notice any such new policy or increase, and (e) with respect to each physical
damage or casualty policy, and each life insurance policy referred to in CLAUSE
(a), (i) cause such policy to provide, pursuant to endorsements in form and
substance satisfactory to Agent, that Agent is named as a loss payee as to
personal property, mortgagee as to real property and an assignee with respect to
life insurance and that the insurer will give 30 days' prior written notice of
the termination or other material modification of such policy, (ii) cause such
policy to provide, pursuant to endorsements in form and substance satisfactory
to Agent, that the insurance shall not be invalidated as against Agent or any
Lender by any action or inaction of any Person other than Agent or any Lender,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policy, (iii) as against Agent and Lenders, the insurers shall
waive any rights of subrogation to the extent that the named insured has waived
such rights (and Borrower hereby irrevocably and unconditionally waives any
right of subrogation against Agent and Lenders, except for claims arising out of
the gross negligence or willful misconduct of Lenders), and (iv) notify
67
Agent within 5 days of obtaining any new policy or increasing coverage under
any existing policy, describing in detail in such notice any such new policy
or increase.
SECTION 11.5 TAXES AND LIABILITIES. Pay, and cause each Subsidiary
to pay, when due all taxes, assessments and other material liabilities except as
contested in good faith and by appropriate proceedings with respect to which
adequate reserves have been established, and are being maintained, in accordance
with GAAP if and so long as forfeiture of any part of the Collateral will not
result from the failure to pay any such taxes, assessments or other material
liabilities during the period of any such contest.
SECTION 11.6 EMPLOYEE BENEFIT PLANS. (a) Maintain, and cause each
current or past member of the Controlled Group to maintain, each Pension Plan as
to which it may have any liability, in compliance in all material respects with
all applicable Requirements of Law or as required pursuant to a collective
bargaining agreement, or if intended to qualify under Section 401(a) or 501(a)
of the Code, in form and administered in a manner so as not to result in any
liability to Borrower or any current or past member of its Controlled Group for
failure to comply with the applicable provisions thereof; and (b) not institute
any actions which could give rise to any of the following, unless the liability
to Borrower or any current or past member of its Controlled Group arising from
the same will not exceed $50,000 or is adequately reserved on the balance sheet
of Borrower or one of its Controlled Group members: (i) a Reportable Event, (ii)
the complete or partial withdrawal from any Multiemployer Plan as defined in
Section 4210 of ERISA, (iii) an amendment, modification or termination or
withdrawal from of a Pension Plan or the entering into of any new Pension Plan,
(whether or not resulting in the posting of a security under Section 401(a)(29)
of the Code or Section 307 of ERISA), (iv) an obligation to file a notice of
intent to terminate a Pension Plan under Section 4041 of ERISA, (v) a lien under
Section 412 of the Code or Section 302 of ERISA, (vi) the institution of
proceedings to terminate a Pension Plan by the Pension Benefit Guaranty
Corporation under Section 4043 of ERISA, or (vii) other than in the ordinary
course, the incurrence of any increase in the contingent liability of Borrower
or any other conditions, events or transactions with respect to any present (or
future) Employee Benefit Plan.
SECTION 11.7 COLLATERAL DOCUMENTS. Cause the Collateral Documents,
as security for the payment and performance of Notes and all other Liabilities,
to be and remain valid, perfected Liens on and security interests in all assets
of Borrower and each Subsidiary (other than HZ Sub) now or hereafter existing or
acquired (free of all other Liens whatsoever other than Permitted Liens).
SECTION 11.8 COMPLIANCE WITH LAWS. Comply, and cause each
Subsidiary to comply, with all Federal, state and local laws, rules and
regulations related to its business except to the extent that the failure to
comply is not reasonably likely to have a Material Adverse Effect.
SECTION 11.9 MAINTENANCE OF PERMITS. Maintain, and cause each
Subsidiary to maintain, all permits, licenses and consents as are required for
the conduct of its business by any state, Federal or local government agency or
instrumentality (including, without
68
limitation, any such license, consent or permit relating to Hazardous
Materials or the disposal thereof) if the failure to maintain such licenses,
permits and consents is not reasonably likely to have a Material Adverse
Effect.
SECTION 11.10 PURCHASE, REDEMPTION, DISTRIBUTION, INTEREST AND
PAYMENT RESTRICTIONS. Not, and not permit any Subsidiary to, directly or
indirectly, purchase, redeem or otherwise acquire any of its Equity Interests or
declare or make any dividend, distribution or payment to any holder of any of
its Equity Interests, or set aside any funds for any such purpose, or make any
other payment of any nature whatsoever to any holder of any shares of the
capital stock or any of their or Borrower's Affiliates or members, partners or
shareholders (in their capacity as such); PROVIDED that (a) any Subsidiary may
declare and pay dividends to any other Subsidiary owning its capital stock or to
Borrower; and (b) Borrower may (i) declare and pay dividends consisting solely
of capital stock of Borrower, (ii) make payments permitted by SECTION 11.19, and
(iii) effect a Permitted HZ Disposition on or before May 31, 2000, provided that
no Unmatured Event of Default or Event of Default has occurred and is
continuing.
SECTION 11.11 LOANS, ADVANCES OR INVESTMENTS. Not, and will not
permit any Subsidiary to, make or permit to exist any loans or advances to,
investments in, or contributions to the capital of, any other Person, except for
(a) the endorsement, in the ordinary course of collection, of instruments
payable to it or to its order, (b) investments in Cash Equivalents, (c)
Borrower's loans and advances to, and investments in, HZ Sub to the extent
described on SCHEDULE 11.11 and (d) other loans, advances and investments
existing on the Closing Date and disclosed on SCHEDULE 11.11.
SECTION 11.12 MERGERS, CONSOLIDATIONS, SALES. Not, and will not
permit any Subsidiary to, (a) be a party to any merger or consolidation or
purchase or otherwise acquire all or substantially all of the assets or stock of
any class of, or any partnership or joint venture interest or other interest in,
any other Person (except for the Permitted HZ Disposition); or (b) sell,
transfer, convey or lease all or any substantial part of its assets or sell or
assign with or without recourse any Account, other than any sale of inventory in
the ordinary course of business, and PROVIDED that the sale, transfer,
conveyance or lease of assets shall be in addition subject to the limitations
set forth in the Collateral Documents.
SECTION 11.13 UNCONDITIONAL PURCHASE OBLIGATIONS. Not, and will not
permit any Subsidiary to, enter into or be a party to any contract for the
purchase of materials, supplies or other property or services, if such contract
requires that payment be made by it regardless of whether delivery is ever made
of such materials, supplies or other property or services.
SECTION 11.14 REGULATIONS U AND X. Not use or permit any proceeds of
the Loans to be used, either directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of "purchasing or carrying margin stock"
within the meaning of Regulations U and X of the Board of Governors of the
Federal Reserve System, as amended from time to time.
69
SECTION 11.15 SUBSIDIARIES. Notwithstanding any provision of this
Agreement to the contrary, not create or permit to exist any Subsidiary except
HZ Sub. Borrower shall not permit HZ Sub to acquire any material assets, or
incur any Indebtedness or other liabilities (other than in the ordinary course
of business or as set forth on SCHEDULE 11.11). Borrower shall not engage in
any business or transactions with HZ Sub except in the ordinary course of its
business and on an arms length basis.
SECTION 11.16 NO AMENDMENT OF CERTAIN DOCUMENTS. Not, and will not
permit any Subsidiary to, enter into or permit to exist any material amendment
or modification of the Organization Documents of Borrower or any Subsidiary or
the Employment Agreements.
SECTION 11.17 OTHER AGREEMENTS. Not, and will not permit any
Subsidiary to, enter into any agreement containing any provision which would be
violated or breached in any material respect by the performance of its
obligations hereunder, any of the Related Documents or under any other
instrument or document delivered or to be delivered by it hereunder or in
connection herewith.
SECTION 11.18 BUSINESS ACTIVITIES; NAME. Not, and will not permit
any Subsidiary to, engage in any type of business except the businesses
described in SCHEDULE 11.18 and the activities incidental and related thereto.
Borrower will, and will cause each Subsidiary to, transact business only in its
corporate name and such trade names as are set forth in SCHEDULE 10.16.
Following the Closing Date neither Borrower nor any Subsidiary will conduct its
business under any trade or fictitious name other than the duly registered names
disclosed on SCHEDULE 10.16.
SECTION 11.19 TRANSACTIONS WITH AFFILIATES. Not, and will not permit
any Subsidiary to, enter into, or cause, suffer or permit to exist any
transaction, arrangement or contract with any Affiliate, including without
limitation the purchase, sale or exchange of property or the rendering of any
service, with any Affiliate, except transactions expressly referred to on
SCHEDULE 11.19 or those conducted on an arms length basis.
SECTION 11.20 ENVIRONMENTAL LIABILITIES. (a) Not, and will not
permit any Subsidiary to, violate any Environmental Law in any material respect;
(b) without limiting the foregoing, not, and not permit any Person to, store,
release, generate or dispose of (except in accordance with Environmental Laws)
any Hazardous Materials at, onto or from any real property owned or operated by
it; or (c) not allow any lien imposed pursuant to any Environmental Law to be
imposed or to remain on such real property.
SECTION 11.21 INDEBTEDNESS. Not, and will not permit any Subsidiary
to, incur or permit to exist any Indebtedness or accounts payable except (a) the
Loans, (b) deferred taxes, (c) current accounts payable arising in the ordinary
course of business and, consistent with Borrower's customary practices on the
date of this Agreement, not overdue, (d) non-current accounts payable which
Borrower or such Subsidiary is contesting in good faith and by appropriate
proceedings diligently conducted, and with respect to which adequate reserves
have been established,
70
and are being maintained, in accordance with GAAP, and (e) Indebtedness of a
type referenced IN CLAUSE (b) of the definition of Permitted Liens provided
that the aggregate outstanding amount thereof does not at any time exceed
$500,000 as to the Indebtedness referenced in such clause ("PERMITTED
PURCHASE MONEY DEBT"), and (f) other Indebtedness shown on SCHEDULE 11.21.
Except as expressly permitted herein, Borrower will not, and will not permit
any Subsidiary to, voluntarily prepay, defease, purchase, redeem, retire or
otherwise acquire any Indebtedness other than the Liabilities.
SECTION 11.22 LIENS. Not, and will not permit any Subsidiary to,
create or permit to exist any Lien with respect to any of its assets now or
hereafter existing or acquired, except Permitted Liens.
SECTION 11.23 FISCAL YEAR. Not, and will not permit any Subsidiary
to, change its Fiscal Year.
SECTION 11.24 LANDLORD AND WAREHOUSEMAN AGREEMENTS. Provide, and
cause each Subsidiary to provide, Agent with copies of all agreements between
such Person and any landlord, bailee, warehouseman or processor which owns any
premises at which Inventory or any other Collateral may, from time to time, be
located. Borrower shall deliver to Agent on or before the date which is 90 days
after the Closing Date a landlord's waiver in form and substance acceptable to
Agent from the lessor of each leased property currently being used by Borrower
or any Subsidiary where Collateral is located. Borrower shall deliver to Agent
a bailee letter in form and substance acceptable to Agent with respect to any
warehouse or other location where Collateral is located. As to any leased
property occupied by Borrower after Closing, Borrower shall deliver to Agent on
or before the initial date of such occupancy a landlord's waiver in form and
substance reasonably acceptable to Agent from the lessor of such leased
property. With respect to leased locations or warehouse space or processing
locations leased on the Closing Date, if Borrower is unable to deliver such a
landlord waiver (within 90 days after the Closing Date) or bailee letter, the
Inventory at that location shall automatically be deemed ineligible without
further action by Agent. In the event that Borrower delivers to Agent such
landlord waiver or bailee letter, as applicable, after the Closing Date, subject
to the terms and conditions of this Agreement (including SECTION 9.3), Inventory
located at such leased location or other location, as applicable, may be
considered Eligible Inventory. Borrower shall timely and fully pay and perform
its obligations under all leases and other agreements with respect to each
leased location or warehouse or processing location where any Collateral is or
may be located. Borrower shall promptly deliver to Agent copies of (a) any and
all default notices received by it under or with respect to any such leased
location or other location, and (b) such other notices or documents as Agent may
request in its reasonable discretion.
SECTION 11.25 MAINTENANCE OF REAL ESTATE. Keep and maintain, and
cause each Subsidiary to keep and maintain, (a) the Real Estate of such Person
and all improvements thereon in good condition and repair (ordinary wear and
tear excepted) and the value and utility thereof; (b) the Real Estate in
conformity with all applicable building and zoning codes and other applicable
laws, statutes, rules and regulations, except where any violation of any such
codes, laws,
71
statutes, rules and regulations is not reasonably likely to have a Material
Adverse Effect and (c) comply in all material respects with the terms of its
leases of Real Estate, in accordance with the applicable leases.
SECTION 11.26 ACCOUNT RECORDS. At all times hereafter maintain a
record of its Accounts, keeping correct and accurate records itemizing and
describing the names and addresses of Account Debtors, relevant invoice numbers,
shipping dates and due dates, collection histories, and Accounts agings, all of
which records shall be available for inspection at Borrower's principal office
(or such office designated in writing by Borrower) upon reasonable prior written
or telephonic notice (provided that no notice shall be required after the
occurrence and during the continuance of an Event of Default or Unmatured Event
of Default) during Borrower's usual business hours at the request of any of
Agent's or any Lender's officers, employees or agents. Borrower shall cooperate
fully with Agent and its agents in connection with any such inspection of its
Accounts and the records with respect thereto. Borrower shall conduct a review
of its bad debt reserves and collection histories at least once each year and
promptly following such review shall supply Agent with a report in a form and
with such specificity as may be reasonably satisfactory to Agent concerning such
review of the Accounts.
SECTION 11.27 INSTRUMENTS AND CHATTEL PAPER. Xxxx all Chattel Paper
with the following legend: "This writing and the obligations evidenced or
secured hereby are subject to the security interest of First Source Financial
LLP, as Agent." Upon the request of Agent after the occurrence and during the
continuance of an Event of Default or Unmatured Event of Default or, at any
other time upon Agent's request therefor, immediately upon Borrower's receipt
thereof, Borrower shall deliver or cause to be delivered to Agent, with
appropriate endorsement and assignment to vest title, with full recourse to
Borrower, and possession in Agent, all Instruments and Chattel Paper which
Borrower now owns or may at any time or times hereafter acquire.
SECTION 11.28 INVENTORY RECORDS. At all times hereafter maintain a
perpetual inventory, keeping correct and accurate records itemizing and
describing the kind and quantity of Inventory and of Eligible Inventory,
Borrower's cost therefor and daily withdrawals therefrom and additions thereto,
and the locations of all Inventory in the possession of bailees, all of which
records shall be available during Borrower's usual business hours at the request
of any of Agent's officers, employees or agents. Borrower shall cooperate fully
with Agent and its agents who, upon reasonable prior written or telephonic
notice (provided that no notice shall be required after the occurrence and
during the continuance of an Event of Default or Unmatured Event of Default),
shall have the right at any time or times during Borrower's usual business hours
to inspect the Inventory and the records with respect thereto. Borrower shall
conduct a physical count of its Inventory (each, a "PHYSICAL INVENTORY") at
least once each year and promptly following each Physical Inventory shall supply
Agent with a report in form and substance satisfactory to Agent concerning such
physical count of its Inventory (including, among other things, a calculation of
consistent reserves), and shall furnish to Agent, at Agent's request, such other
documents and reports with respect to the Inventory. Each Physical Inventory
shall be observed by Xxxxxx Xxxxxxxx LLP (or such other independent certified
public accountants of recognized standing as shall be selected
72
by Borrower with Agent's approval, which will not be unreasonably withheld).
For the purposes of preparing the monthly financial statements described in
SECTION 11.1(d), Inventory shall be computed using the applicable gross
margins on the current month's product sales.
SECTION 11.29 COLLATERAL LOCATIONS. Not, and shall not permit any
Subsidiary to, (a) sell any of the Inventory on a guaranteed sale,
sale-and-return, sale on approval or consignment basis or any other basis
subject to a repurchase obligation or return right or (b) change the
locations of Collateral as set forth on SCHEDULE 11.29 or the mailing
address of Borrower, nor shall there be established additional places of
business or additional locations at which Collateral is stored, kept or
processed unless (i) Borrower shall have given Agent not less than thirty
(30) days prior written notice thereof (ii) Agent shall have determined that,
after giving effect to any such change of address or location, Agent shall
have a first perfected Lien in the Collateral except for Permitted Liens,
(iii) in the case of Collateral locations, Borrower shall have delivered a
landlord waiver or bailee letter, as applicable, in form and substance
satisfactory to Agent with respect to such location, and (iv) all negotiable
documents and receipts in respect of any Collateral maintained at such
premises are promptly delivered to Agent. Prior to making any such change or
establishing such new location, Borrower, as applicable, shall execute any
additional financing statements or other documents or notices required by
Agent. All Collateral located at any such new location shall automatically
without further action by Agent be deemed ineligible to constitute Eligible
Accounts or Eligible Inventory, as the case may be, until Borrower shall have
complied with the requirements of this SECTION 11.29 and SECTION 11.24.
SECTION 11.30 DISPOSAL OF PROPERTY. Not, and shall not permit any
Subsidiary to, sell, lease, assign, transfer or otherwise dispose of any of its
Property or rights to any Person except for (i) bona fide sales of Inventory to
customers for fair value in the ordinary course of business, (ii) sales of
Equipment which is obsolete, worn-out or otherwise not useable in Borrower's
business in an aggregate amount in any Fiscal Year not to exceed One Hundred
Thousand Dollars ($100,000) and (iii) the Permitted HZ Disposition. In the
event any Equipment of Borrower or any Subsidiary is sold, transferred or
otherwise disposed of as permitted by this SECTION 11.30 or with the Required
Lenders' consent, and (a) such sale, transfer or disposition is effected without
replacement of the Equipment so sold, transferred or disposed of or such
Equipment is replaced by Equipment leased by such Person, such Person shall
promptly (but in any event within ninety (90) Business Days of the receipt
thereof) deliver all of the cash proceeds of any such sale, transfer or
disposition to Agent, or (b) such sale, transfer or disposition is made in
connection with the purchase by such Person of replacement Equipment, such
Person shall use the proceeds of such sale, transfer or disposition to finance
the purchase by such Person of replacement Equipment and shall deliver to Agent
written evidence of the use of the proceeds for such purchase. Except as
permitted by SECTION 11.22, all replacement Equipment purchased by Borrower or
any Subsidiary shall be free and clear of all Liens, except for Liens in favor
of Agent. All proceeds delivered to Agent under this SECTION 11.30 shall be
applied to the remaining scheduled payments on the Term Loans in the inverse
order of their maturity thereof or, if the Term Loans have been paid in full, to
the outstanding Revolving Loans (without permanent reduction of the Revolving
Commitment)
73
without premium or penalty except as provided in SECTION 2.8, with such
proceeds to be applied first to Prime Rate Loans until paid in full and then
to LIBOR Rate Loans.
SECTION 11.31 IMPAIRMENT AGREEMENTS. Not, and shall not permit any
Subsidiary to, enter into or assume any agreement, instrument, indenture or
other obligation (other than the Related Documents) which (a) contains a
negative pledge provision which would require a sharing of any interest in the
Collateral, (b) prohibits or limits the creation or assumption of any Lien in
favor of Agent for the benefit of itself upon its Property, whether now owned or
hereafter acquired, or (c) restricts, prohibits or requires the consent of any
Person with respect to the payment of any dividend or other distribution to any
holder of its Equity Interests.
SECTION 11.32 YEAR 2000. Within 90 days of the Closing Date Borrower
shall have conducted a review and assessment of all computer applications and
programs (the "SOFTWARE") owned, licensed or used by any of Borrower and its
Subsidiaries and all such Software shall be fully able to perform date-sensitive
or other functions on or after, or as to dates on or after, December 31, 1999,
except for immaterial Software where the failure to perform such function is not
reasonably likely to have a Material Adverse Effect.
SECTION 11.33 CORPORATE ACCOUNTS. Not maintain corporate deposit
accounts jointly with any Affiliate or commingle any of its funds with funds of
any Affiliate.
SECTION 11.34 FINANCIAL COVENANTS.
(a) INTEREST COVERAGE RATIO. Not permit the Interest Coverage Ratio
for any four-quarter period (except that such period shall be three calendar
quarters as to the period ending September 30, 1999) set forth below to be less
than the ratio set forth opposite such period below:
------------------------------------------------------------------
CALENDAR QUARTERS ENDING: MINIMUM RATIO (TO 1.0):
------------------------------------------------------------------
September 30, 1999 3.25
------------------------------------------------------------------
December 31, 1999 4.00
------------------------------------------------------------------
March 31, 2000 4.50
------------------------------------------------------------------
June 30, 2000 5.00
------------------------------------------------------------------
September 30, 2000 5.50
------------------------------------------------------------------
December 31, 2000 6.00
------------------------------------------------------------------
March 31, 2001 6.50
------------------------------------------------------------------
74
------------------------------------------------------------------
June 30, 2001 7.00
------------------------------------------------------------------
September 30, 2001 7.50
------------------------------------------------------------------
December 31, 2001 8.00
------------------------------------------------------------------
After December 31, 2001 8.00
------------------------------------------------------------------
(b) DEBT TO EBITDA RATIO. Not permit the Debt to EBITDA Ratio
measured on the last day of any Fiscal Quarter set forth below to be more
than the ratio set forth opposite such period below:
FISCAL QUARTERS ENDING: MAXIMUM RATIO (TO 1.0):
------------------------------------------------------------------
September 30, 1999 4.50
------------------------------------------------------------------
December 31, 1999 2.50
------------------------------------------------------------------
March 31, 2000 1.75
------------------------------------------------------------------
June 30, 2000 1.50
------------------------------------------------------------------
September 30, 2000 1.50
------------------------------------------------------------------
December 31, 2000 1.50
------------------------------------------------------------------
March 31, 2001 1.25
------------------------------------------------------------------
June 30, 2001 1.25
------------------------------------------------------------------
September 30, 2001 1.25
------------------------------------------------------------------
December 31, 2001 1.25
------------------------------------------------------------------
After December 31, 2001 1.00
------------------------------------------------------------------
(c) FIXED CHARGE RATIO. Not permit the Fixed Charge Ratio for any
four-quarter period (except that such period shall be three calendar quarters
as to the period ending September 30, 1999) set forth below to be less than
the amount set forth opposite such period below:
------------------------------------------------------------------
CALENDAR QUARTERS ENDING: MINIMUM RATIO (TO 1.0):
------------------------------------------------------------------
September 30, 1999 1.25
------------------------------------------------------------------
December 31, 1999 1.25
------------------------------------------------------------------
75
------------------------------------------------------------------
March 31, 2000 1.25
------------------------------------------------------------------
June 30, 2000 1.25
------------------------------------------------------------------
September 30, 2000 1.25
------------------------------------------------------------------
December 31, 2000 1.30
------------------------------------------------------------------
March 31, 2001 1.30
------------------------------------------------------------------
June 30, 2001 1.35
------------------------------------------------------------------
September 30, 2001 1.40
------------------------------------------------------------------
December 31, 2001 1.45
------------------------------------------------------------------
After December 31, 2001 1.50
------------------------------------------------------------------
(d) GROSS CAPITAL EXPENDITURES. Not, directly or indirectly (by way
of the acquisition of the securities of a Person or otherwise), make or
commit to make Gross Capital Expenditures, except that Borrower may, so long
as no Unmatured Event of Default or Event of Default under Section 13.1(a) or
(b) shall exist or would result therefrom, make Gross Capital Expenditures in
the ordinary course of business in an aggregate amount not to exceed
$1,750,000 in the Fiscal Year ending December 31, 1999, and $750,000 in any
Fiscal Year ending thereafter.
SECTION 12 CONDITIONS.
The obligation of Lenders to make the Loans is subject to the
following conditions precedent or concurrent:
SECTION 12.1 INITIAL LOANS. The obligation of each Lender to make
its Term Loan and its initial Revolving Loan shall be subject to the prior or
concurrent satisfaction (in form and substance satisfactory to Agent and the
Required Lenders) of each of the conditions precedent set forth below:
(a) NO DEFAULT. No Event of Default or Unmatured Event of Default
shall have occurred and be continuing or will result from the making of such
Loan.
(b) REPRESENTATIONS AND WARRANTIES. All warranties and
representations contained in this Agreement and the Related Documents shall be
true and correct in all material respects as of the date of such Loan, with the
same effect as though made on the date of such Loan (except for those warranties
and representations that are stated to be made as of a specific date which will
be true and correct in all material respects only as of such date).
76
(c) EMPLOYMENT AGREEMENTS. The terms and provisions of the
Employment Agreements shall be satisfactory in form and substance to Agent and
the Required Lenders in their discretion.
(d) NO LITIGATION; NO MATERIAL ADVERSE DEVELOPMENT. In the opinion
of Agent and the Required Lenders, in their reasonable discretion, (i) no
litigation (including, without limitation, derivative actions), arbitration,
governmental investigation or proceeding or inquiry shall, on the date of the
initial Loan, be pending, or to the knowledge of Borrower, threatened which
seeks (x) to enjoin or otherwise prevent the consummation of, the Related
Transactions or (y) if adversely determined is reasonably likely to have a
Material Adverse Effect, and (ii) no material adverse development shall have
occurred in any litigation (including, without limitation, derivative actions),
arbitration, government investigation or proceeding or inquiry disclosed in
SCHEDULE 10.4 which is reasonably likely to have a Material Adverse Effect.
(e) PAYMENT OF FEES. The fees referred to in SECTION 5 which are due
and payable on or prior to the date of the initial Loan shall have been paid to
Agent and Lenders.
(f) ESTABLISHMENT OF ACCOUNTS. The Lockbox, the Master Account and
the Operating Accounts shall have been established pursuant to SECTION 6.2 and
the financial institutions at which Borrower has established the payroll and
xxxxx cash accounts described in SECTION 6.2(C) shall have furnished Agent with
the acknowledgment referred to in such Section.
(g) COLLATERAL DOCUMENTS. Agent shall have received all of the
following, each duly executed and dated the date of the initial Loan (or such
earlier date as shall be satisfactory to Agent), in form and substance
satisfactory to Agent: the Notes, the Bank Agency Agreement, the Security
Agreements, the Stock Pledge Agreements and the Employment Agreements,
Borrower's certificate of incorporation (including the terms of any outstanding
shares of Borrower's preferred stock) and such other agreements, documents,
instruments, certificates and opinions as Agent may reasonably request.
(h) AMOUNT OF REVOLVING LOANS; BORROWING AVAILABILITY. The amount of
the Revolving Loans made on the Closing Date shall not exceed $3,000,000.
(i) PAYMENT OF INDEBTEDNESS TO BE REFINANCED. The obligations of
Borrower identified on SCHEDULE 12.1 (herein called "INDEBTEDNESS TO BE
REFINANCED"), together with all interest accrued thereon and all prepayment
premiums and other amounts payable in connection therewith, shall have been
refinanced in full from the proceeds of the Loans and Agent shall have received
(i) the certificate of the President or a Vice President of Borrower, dated the
Closing Date to such effect, (ii) a letter from each of the holders of the
Indebtedness to be Refinanced setting forth in each case (x) the amount of
principal and accrued interest thereon due such holder as of the date of such
letter, (y) the per diem interest rate on unpaid principal thereunder as of such
date, and (z) payment instructions relative to the payment of such Indebtedness
to be Refinanced, and, unless waived by Agent, enclosing in escrow any and all
Uniform Commercial Code termination
77
statements, mortgage releases and releases of security interests in patents,
trademarks and copyrights, in form and substance satisfactory to Agent,
sufficient to terminate all Liens securing any of the Indebtedness to be
Refinanced.
(j) FINANCIAL STATEMENTS. On or before the fifth Business Day prior
to the Closing Date, Borrower shall have furnished to Agent and each Lender the
financial statements referred to in CLAUSES (b), (c) and (d), of SECTION 11.1
for the most recent annual, quarterly and monthly periods of Borrower; PROVIDED,
that the quarterly and monthly periods reflected in such financial statements
shall pertain to quarterly and monthly periods ending no more than more than 45
days prior to the Closing Date.
(k) LIFE INSURANCE. Agent shall have received a duly executed
assignment of life insurance on the lives of each of R. Xxxxxxx Xxxxxx and Xxxxx
Xxxxxxx in form and substance satisfactory to Agent in an amount not less than
$5,000,000 each.
(l) OTHER DOCUMENTS. Agent shall have received all other information
and documents which Agent reasonably may have requested in connection with this
Agreement in form and substance satisfactory to Agent.
SECTION 12.2 ALL LOANS; LC GUARANTIES. The obligation of each
Lender to make its initial Loans and each subsequent Loan or to issue an LC
Guaranty is subject to the following further conditions precedent (except as set
forth in SECTION 12.2(c)):
(a) (i) No Event of Default or Unmatured Event of Default shall have
occurred and be continuing or will result from the making of such Loan or
issuing such LC Guaranty, (ii) the warranties and representations contained in
this Agreement and the Related Documents shall be true and correct in all
material respects as of the date of such requested Loan or provision of such LC
Guaranty, with the same effect as though made on the date of such Loan or
provision of such LC Guaranty, and (iii) there shall have been no material
adverse change or notice to Borrower of prospective material adverse change with
respect to insurance maintained by Borrower.
(b) (i) No claim, litigation (including, without limitation,
derivative actions), arbitration, governmental proceeding, investigation or
inquiry not disclosed in writing by Borrower to Lender prior to the date of the
last previous Loan or issuance of an LC Guaranty, whichever shall have most
recently occurred, is pending or known to be threatened against Borrower, (ii)
no material development not so disclosed shall have occurred in any claim,
litigation (including, without limitation, derivative actions), arbitration,
governmental proceeding, investigation or inquiry which was so disclosed, and
(iii) no event, condition or development shall have occurred or developed at any
time (whether before or after the making of the last previous Loan), which (in
the case of each of the foregoing CLAUSES (i) through (iii)) in the reasonable
opinion of the Required Lenders could have a Material Adverse Effect.
78
(c) Agent shall have received: (i) a Borrowing Base Certificate
delivered in accordance with SECTION 11.1(a), (ii) not later than the twentieth
Business Day of the first calendar month following the making of each Loan, a
certificate, substantially in the form of EXHIBIT H or in such other
substantially similar form as Agent shall from time to time designate to
Borrower (the "BORROWING CERTIFICATE") dated the last Business Day of the month
in which such Loan was requested, signed by the President or a Vice President of
Borrower, (iii) not less than three (3) days prior to the making of an LC
Guaranty, a certificate substantially in the form of EXHIBIT I (the "LC GUARANTY
REQUEST") relating to all Permitted LCs to be covered by an LC Guaranty since
the most recent prior LC Guaranty Request, signed by the President or a Vice
President or other appropriate officer of Borrower, and (iv) such other
documents as Agent may reasonably request in support of such requested Loan or
LC Guaranty, provided, that unless otherwise requested by Agent, Borrower may
deliver one Borrowing Certificate each calendar month for all Loans for which
such Borrowing Certificate is required.
SECTION 13 EVENTS OF DEFAULT AND THEIR EFFECT.
SECTION 13.1 EVENTS OF DEFAULT. Each of the following shall
constitute an Event of Default under this Agreement:
(a) Default in the payment when due, whether by acceleration or
otherwise, of any principal of or interest on any Loan.
(b) Default, and continuance thereof for five (5) Business Days, in
the payment when due, whether by acceleration or otherwise, of any amount
payable hereunder or under the Related Documents (other than any amount
described in SECTION 13.1(a)).
(c) (i) Default in the payment when due (subject to any applicable
grace period), whether by acceleration or otherwise, of any other Indebtedness
of, or guaranteed by, Borrower or any Subsidiary, or (ii) default in the
performance or observance of any obligation or condition with respect to any
such other Indebtedness of, or guaranteed by, Borrower or any Subsidiary, if the
effect of such default is to accelerate the maturity of (or there is matured and
unpaid) such other Indebtedness aggregating $250,000 or more, or to cause such
other Indebtedness aggregating $250,000 or more to become due and payable, or to
permit the holder or holders of such other Indebtedness of $250,000 or more, or
any trustee or agent for such holders, to cause such other Indebtedness to
become due and payable prior to its expressed maturity.
(d) Default in the payment when due, or in the performance or
observance of any material obligation of, or material condition agreed to by
Borrower or any Subsidiary (subject to applicable cure periods) with respect to
any Material Contract or any Material Intellectual Property Right (except only
to the extent that the existence of any such default is not covered by insurance
or an indemnification agreement acceptable to Agent or is not being contested by
such Person in good faith and by appropriate proceedings diligently conducted
and with respect to which such Person has established, and is maintaining,
adequate reserves therefor in accordance with GAAP).
79
(e) (i) Borrower or any Subsidiary becomes insolvent or generally
fails to pay, or admits in writing its inability to pay, debts as they become
due; or (ii) Borrower or any Subsidiary applies for, consents to, or acquiesces
in the appointment of, a trustee, receiver or other custodian or similar Person
for itself or for any of its Property, or makes a general assignment for the
benefit of creditors; or (iii) in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian or similar Person is
appointed for Borrower or any Subsidiary or for a substantial part of its
Property, unless (I) Borrower or such Subsidiary institutes appropriate
proceedings to contest or discharge such appointment within 10 Business Days and
thereafter continuously and diligently prosecutes such proceedings and (II) such
appointment is in fact discharged within 60 days of such appointment; or (iv)
any bankruptcy, reorganization, debt arrangement, or other case or proceeding
under any bankruptcy or insolvency law, or any dissolution or liquidation
proceeding is commenced in respect of Borrower or any Subsidiary, unless (X)
such case or proceeding is not commenced by such Person, (Y) such case or
proceeding is not consented to or acquiesced in by such Person, and (Z) such
Person institutes appropriate proceedings to dismiss such case or proceeding
within 10 Business Days and thereafter continuously and diligently prosecutes
such proceedings and such case or proceeding is in fact dismissed within 60 days
after the commencement thereof; or (v) Borrower or any Subsidiary takes any
action to authorize, or in furtherance of, any of the foregoing.
(f) Failure by Borrower to comply with or to perform (i) any
provision of this Agreement (and not constituting an Event of Default under the
succeeding clause (ii) or any of the other provisions of this SECTION 13) and
continuance of such failure for 30 days after Borrower has notice thereof, or
(ii) any of the provisions contained in SECTIONS 6.1, 6.2, 7.1, 7.4, 7.6, 9,
11.1(a), 11.1(h), 11.1(i), 11.1(p), 11.2(a), 11.3 (except for failure to
maintain complete and accurate books and records), 11.4, 11.7, and 11.10 through
11.34 (other than 11.23).
(g) Any warranty or representation made by or on behalf of Borrower
or any other Person (other than Agent or a Lender) herein or in any of the other
Related Documents, or otherwise in connection herewith or therewith is
inaccurate or incorrect, or is breached or false or misleading, in any material
respect as of the date such warranty or representation is made; or any schedule,
certificate, financial statement, report, notice, or other writing furnished by
or on behalf of Borrower or any Subsidiary to Agent or any Lender is false or
misleading in any material respect on the date as of which the facts therein set
forth are stated or certified.
(h) Except to the extent that any of the following is expressly
permitted hereunder or does not give rise to the incurrence by Borrower or any
current or past member of its Controlled Group of any liability in excess of
$250,000, or except to the extent any of the following is adequately reserved on
the balance sheet of Borrower or one of its current members of its Controlled
Group, the institution of any steps by Borrower or any other Person, including
the Pension Benefit Guaranty Corporation, (i) to amend, modify or terminate a
Pension Plan or to enter into any new Pension Plan, (ii) to cause a complete or
partial withdrawal from any Multiemployer Plan, or (iii) other than in the
ordinary course, to directly or indirectly cause to exist any other
80
conditions, events or transaction which could give rise to any material
liability of Borrower or any current member of its Controlled Group with
respect to any Employee Benefit Plan.
(i) Borrower or any Affiliate of Borrower that is a party to any
other Related Document (other than Agent or any Lender) shall fail to comply
with or to perform (subject to any applicable grace period) any provision of
such Related Document applicable to it; or any of the Related Documents shall
fail to remain in full force and effect; or any action shall be taken by any
Person (other than Agent or any Lender or the Master Account Bank) to
discontinue or terminate any of the Related Documents or to contest the
validity, binding nature or enforceability of any thereof.
(j) Any of the Collateral or the Property of Borrower or any
Subsidiary having a fair market value of more than $250,000 in the aggregate is
attached, seized, subjected to a writ or distress warrant, or levied upon, or
come within the possession or control of any judgment creditor, receiver,
trustee, custodian or assignee for the benefit of creditors of Borrower or any
Subsidiary and on or before the thirty (30) day period thereafter such
Collateral or Property is not returned to such Person or such writ, distress
warrant or levy is not dismissed, vacated, stayed or lifted.
(k) Any Change of Control shall occur.
(l) There shall be entered against Borrower or any Subsidiary one or
more judgments, awards or decrees, or orders of attachment, garnishment or any
other writ, which exceed $250,000 in the aggregate at any one time outstanding,
excluding judgments, awards, decrees, orders or writs (i) for which there is
full insurance and with respect to which the insurer has assumed responsibility
in writing, (ii) for which there is full indemnification (upon terms and by
creditworthy indemnitors which are satisfactory to Agent) or (iii) which have
been in force for less than the applicable period for filing an appeal so long
as execution is not levied thereunder (or in respect of which Borrower or such
Subsidiary shall at the time in good faith be prosecuting an appeal or
proceeding for review and in respect of which a stay of execution or appropriate
appeal bond shall have been obtained pending such appeal or review).
(m) The receipt by Borrower or any Subsidiary of any notice, claim or
assessment from any Federal, state or local governmental authority, or any other
Person, asserting liability or potential liability against Borrower or such
Subsidiary under any Environmental Law that is reasonably likely to have a
Material Adverse Effect.
(n) (i) R. Xxxxxxx Xxxxxx shall cease to be Chairman of Borrower
before June 10, 2000; or thereafter R. Xxxxxxx Xxxxxx shall cease to be Chairman
of Borrower unless he is replaced within ninety (90) days by a person reasonably
acceptable to Agent, or (ii) Xxxxx Xxxxxxx shall cease to be President and
Chief Executive Officer of Borrower unless he is replaced within 90 days by a
person reasonably acceptable to Agent.
81
(o) Any material damage to, or loss, theft, or destruction of, any of
the Collateral, whether or not insured, or any strike, lockout, labor dispute,
embargo, condemnation, act of God or public enemy, or other casualty which
results in or causes cessation or substantial curtailment of production or other
revenue producing activities of more than ten percent (10%) of Borrower's
consolidated gross revenues for more than thirty (30) consecutive days (based
upon consolidated gross revenues for the most recent twelve months ending on the
date of such occurrence).
(p) Any security interest created under any Related Document shall
cease to be a valid and perfected first priority security interest or Lien
(subject to Permitted Liens) in any of the Collateral purported to be covered
thereby for any reason other than any action taken by Agent or any Lender or
the failure of Agent or any Lender to take any action within its control.
SECTION 13.2 EFFECT OF EVENT OF DEFAULT. If an Unmatured Event of
Default or an Event of Default shall have occurred and be continuing, Agent may
elect to do one or more of the following at any time or times and in any order:
(i) reduce the amount of the Revolving Commitment, (ii) restrict the amount of,
or suspend its obligations to make, Revolving Loans, (iii) restrict or suspend
the issuance of Letters of Credit or LC Guaranties or (iv) demand that Borrower
immediately deposit with Agent an amount equal to one hundred ten percent (110%)
of the LC Exposure to enable Agent to make payments under the LC Guaranties when
required, and such amount shall become immediately due and payable. If any
Event of Default described in SECTION 13.1(e) shall occur, the Commitments (if
not theretofore terminated) shall immediately terminate and the Notes and all
other Liabilities shall become immediately due and payable, all without notice
of any kind; and, in the case of any other Event of Default, Agent may, and
Agent shall at the direction of the Required Lenders, declare the Commitments
(if not theretofore terminated) to be terminated and the Notes and all other
Liabilities to be due and payable, whereupon the Commitments (if not theretofore
terminated) shall immediately terminate and the Notes and all other Liabilities
shall become immediately due and payable, all without further notice of any
kind. Agent shall promptly provide Borrower written notice of any such
declaration but failure to do so shall not impair the effect of such
declaration. Notwithstanding the foregoing, the effect as an Event of Default
of any event described in SECTION 13 may be waived by the Required Lenders in
writing.
SECTION 13.3 RIGHTS AND REMEDIES GENERALLY. Upon acceleration of
the Liabilities, Agent, on behalf of Lenders, shall have, in addition to any
other rights and remedies contained in this Agreement or in any of the other
Related Documents, all of the rights and remedies of a secured party under the
UCC or other applicable laws, all of which rights and remedies shall be
cumulative and non-exclusive, to the extent permitted by law. In addition to
all such rights and remedies, Agent shall have the right, subject to provisions
of applicable law, to sell, lease or otherwise dispose of all or any part of the
Collateral and the sale, lease or other disposition of the Collateral, or any
part thereof, by Agent after an Event of Default may be for cash, credit or any
combination thereof, and Agent or any Lender may purchase all or any part of the
Collateral at public or, if permitted by law, private sale, and in lieu of
actual payment of such purchase price, may set-off the amount of such purchase
price against the Liabilities then owing. Any sales of the Collateral may be
adjourned from time to time with or without notice. Agent shall have the right
82
to conduct such sales on Borrower's premises, at Borrower's expense, or
elsewhere, on such occasion or occasions as Agent may see fit.
SECTION 13.4 ENTRY UPON PREMISES AND ACCESS TO INFORMATION. Upon
acceleration of the Liabilities, Agent shall have the right (i) to cause the
Collateral to remain on Borrower's premises, without any obligation to pay rent,
(ii) to enter upon the premises of Borrower where the Collateral is located or
any other place or places where the Collateral is believed to be located and
kept, without any obligation to pay rent, to render the Collateral useable or
saleable, or to remove the Collateral therefrom to the premises of Agent or any
agent of Agent, at Borrower's expense, for such time as Agent may desire in
order effectively to collect or liquidate the Collateral, and (iii) to require
Borrower to assemble the Collateral and make it available to Agent at a place or
places to be designated by Agent. Upon acceleration of the Liabilities, Agent
shall have the right to take possession of Borrower's original books and records
(other than those books and records which Borrower is required by law to
maintain), to obtain access to Borrower's data processing equipment, computer
hardware and software relating to the Collateral and to use all of the foregoing
and the information contained therein in any manner Agent deems appropriate; and
Agent shall have the right to notify postal authorities to change the address
for delivery of Borrower's mail to an address designated by Agent and to
receive, open and dispose of all mail addressed to Borrower and to take
possession of all checks or other original remittances contained in such mail
(provided that Agent shall promptly provide Borrower with copies of such mail).
SECTION 13.5 SALE OR OTHER DISPOSITION OF COLLATERAL BY AGENT. Any
notice required to be given by Agent or any Lender of a sale, lease or other
disposition or other intended action by Agent with respect to any of the
Collateral which is given to Borrower as specified in SECTION 14.3, at least ten
(10) days prior to such proposed action, shall constitute fair and reasonable
notice to Borrower of any such action. The net proceeds realized by Agent upon
any such sale or other disposition, after deduction for the expenses of
retaking, holding, storing, transporting, preparing for sale, selling or
otherwise disposing of the Collateral incurred by Agent in connection therewith,
shall be applied as provided herein toward satisfaction of the Liabilities.
Agent shall account to Borrower for any surplus realized upon such sale or other
disposition, and Borrower shall remain liable for any deficiency. The
commencement of any action, legal or equitable, or the rendering of any judgment
or decree for any deficiency shall not affect Agent's Liens on the Collateral
until the Liabilities are fully paid.
SECTION 13.6 NOTICE TO ACCOUNT DEBTORS. Agent may, in its sole
discretion, at any time or times, upon the occurrence and during the continuance
of an Event of Default and without prior notice to Borrower, notify any or all
Account Debtors that the Accounts have been assigned to Agent, for the benefit
of Lenders, and that Agent has a Lien therein. Upon the occurrence and during
the continuance of an Event of Default, Agent may direct or, at the request of
Agent, Borrower shall direct, any or all Account Debtors to make all payments
upon the Accounts directly to Agent. Agent shall furnish Borrower with a copy
of any such notice.
83
SECTION 13.7 WAIVER OF DEMAND. DEMAND, PRESENTMENT, PROTEST AND
NOTICE OF DEMAND, PRESENTMENT, PROTEST, NONPAYMENT, INTENT TO ACCELERATE AND
ACCELERATION ARE HEREBY WAIVED BY BORROWER. BORROWER ALSO WAIVES THE BENEFIT OF
ALL VALUATION, APPRAISAL AND EXEMPTION LAWS.
SECTION 13.8 WAIVER OF NOTICE. EXCEPT AS PROVIDED IN SECTION 13.5,
UPON THE OCCURRENCE OF A DEFAULT OR AN EVENT OF DEFAULT, BORROWER HEREBY WAIVES
ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY AGENT AND
LENDERS OF THEIR RIGHTS TO REPOSSESS THE COLLATERAL WITHOUT JUDICIAL PROCESS OR
TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL WITHOUT PRIOR NOTICE OR HEARING.
BORROWER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH
RESPECT TO THIS TRANSACTION AND THIS AGREEMENT.
SECTION 14 GENERAL.
SECTION 14.1 WAIVER; AMENDMENTS. No delay on the part of any Lender
or Agent or any holder of a Note or other Liability in the exercise of any
right, power or remedy shall operate as a waiver thereof, nor shall any single
or partial exercise by any of them of any right, power or remedy preclude other
or further exercise thereof, or the exercise of any other right, power or
remedy. No amendment, modification or waiver of, or consent with respect to,
any provision of this Agreement or a Note or any Related Document shall in any
event be effective unless the same shall be in writing and signed and delivered
by Borrower, the Agent and the Required Lenders, and then any such amendment,
modification, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided that no amendment, waiver
or consent shall, unless in writing and signed by each affected Lender, do any
of the following:
(a) increase the Commitment of a Lender or subject a Lender to any
additional obligations;
(b) except as otherwise expressly provided in this Agreement, reduce
the principal of, or interest on, the Notes, any Reimbursement Obligations or
any fees hereunder;
(c) postpone any date fixed for any payment in respect of principal
of, or interest on, the Notes, any Reimbursement Obligations or any fees
hereunder;
(d) change the percentage of the Commitment, or any minimum
requirement, necessary for Lenders or the Required Lenders to take any action
hereunder;
(e) amend or waive this SECTION 14.1, or change the definition of
Required Lenders; or
84
(f) except as otherwise expressly provided in this Agreement
(including without limitation as provided in SECTION 11.30), and other than in
connection with the financing, refinancing, sale or other disposition of any
asset of Borrower or any Subsidiary permitted under this Agreement, release any
Liens in favor of Agent on all or any substantial portion of the Collateral;
PROVIDED, FURTHER, that no amendment, waiver or consent affecting the rights or
duties of Agent under any Related Documents shall in any event be effective,
unless in writing and signed by Agent, in addition to Lenders required
hereinabove to take such action. Notwithstanding any of the foregoing to the
contrary, the consent of Borrower shall not be required for any amendment,
modification or waiver of the provisions of SECTION 15.2 (other than the
provisions of SECTION 15.2.9). In addition, Borrower and Lenders hereby
authorize Agent to modify this Agreement by unilaterally amending or
supplementing SCHEDULE 1 from time to time in the manner requested by Borrower,
Agent or any Lender in order to reflect any assignments or transfers of the
Loans, as provided for hereunder; PROVIDED, HOWEVER that Agent shall promptly
deliver a copy of any such modification to Borrower and each Lender. All Events
of Default shall continue until the same are waived in accordance with this
SECTION 14.1.
SECTION 14.2 CONFIRMATIONS. Borrower and Lenders (or any holder of
a Note) agree from time to time, upon written request received by it from the
other, to confirm to the other in writing the aggregate unpaid principal amount
of the Loans then outstanding under such Note.
SECTION 14.3 NOTICES. Except with respect to SECTION 2.3: (a)
notices forwarded by mail shall be deemed to have been given on the earlier to
occur of (i) receipt or (ii) three days after the date sent if sent by
registered or certified mail, postage paid, and:
(x) IF TO BORROWER, addressed to Borrower at its address shown below
its signature hereto; or
(y) IF TO AGENT, addressed to Agent at the address shown below its
signature hereto; or
(z) IF TO A LENDER, addressed to such Lender at its address set forth
on SCHEDULE 1; or
in the case of any party, at such other address as such party may, by written
notice received by the other parties to this Agreement, have designated as its
address for notices; and (b) notices given by telegram or facsimile transmission
shall be deemed to have been given when sent if addressed to the party to whom
sent, at its address as aforesaid. Notices of borrowing pursuant to SECTION 2.3
and SECTION 4.3 shall be effective upon receipt by Agent and shall be in writing
(or by telephone to be confirmed in writing by Borrower). Agent and Lenders
shall be entitled to rely upon all telephone and Electronic Notices and Borrower
shall indemnify and hold Agent and each Lender harmless
85
from any loss, cost or expense ensuing from any such reliance, which
indemnification shall survive any termination of this Agreement.
SECTION 14.4 COSTS, EXPENSES AND TAXES. Borrower shall pay on
demand all reasonable out-of-pocket costs and expenses of Agent (including the
reasonable fees and out-of-pocket expenses of counsel for Agent and of local
counsel, if any, who may be retained by said counsel and all reasonable costs of
appraisals, surveys, environmental reviews and the like reasonably required to
be made or completed) in connection with the preparation, execution and delivery
of this Agreement, the Related Documents and all other instruments or documents
provided for herein or delivered or to be delivered hereunder or in connection
herewith. Borrower further agrees to pay all reasonable out-of-pocket costs and
expenses (including reasonable attorneys' fees and legal expenses) incurred by
Agent (and in the case of enforcement, each Lender) in connection with the
administration, enforcement, waiver or amendment of this Agreement, the Related
Documents and any such other instruments or documents. In addition, Borrower
agrees to pay, and to save Agent and each Lender harmless from all liability
for, any document, stamp, filing, recording, mortgage or other taxes which may
be payable in connection with the borrowings hereunder or the execution,
delivery, recording or filing of this Agreement, any of the Related Documents or
of any other instruments or documents provided for herein or delivered or to be
delivered hereunder or in connection herewith. All obligations provided for in
this SECTION 14.4 shall survive any termination of this Agreement.
SECTION 14.5 INDEMNIFICATION. In consideration of Agent's and each
Lender's execution and delivery of this Agreement and Lenders' extension of the
Commitments, Borrower hereby agrees to indemnify, exonerate and hold Agent and
each Lender and Manager and each of their respective officers, directors,
employees and agents (including, without limitation, Master Account Bank, and
herein collectively called "LENDER PARTIES" and individually called a "LENDER
PARTY") free and harmless from and against any and all claims, demands, actions,
causes of action, suits, losses, costs (including, without limitation, all
documentary, recording, filing, mortgage or other stamp taxes or duties),
charges, liabilities and damages, and expenses in connection therewith
(irrespective of whether such Lender Party is a party to the action for which
indemnification hereunder is sought), and including, without limitation,
reasonable attorneys' fees and disbursements (called in this SECTION 14.5 the
"INDEMNIFIED LIABILITIES"), of any and every kind whatsoever paid, incurred or
suffered by, or asserted against, any Lender Party for, with respect to, arising
out of or as a direct or indirect result of:
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan or involving any Loan or
the execution, delivery, performance or enforcement of this Agreement, the
Related Documents and any instrument, document or agreement executed pursuant
hereto by any of Lender Parties;
(b) (i) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission or release from, any real property legally or
beneficially owned (or any estate or interest which is owned) or operated by
Borrower or any Subsidiary (including, without
86
limitation, any property owned by a land trust the beneficial interest in
which is owned, in whole or in part, by Borrower or any Subsidiary) of any
Hazardous Material; (ii) any claims, demands, actions, causes of action,
suits, losses, costs, charges, liabilities and damages, asserted or arising
under Environmental Laws relating to any such real property or Borrower's or
any Subsidiary's operations thereon, or arising from a breach in any of
Borrower's representations, warranties or covenants herein relating to
environmental matters, and (iii) any of the conditions disclosed in any of
the documents listed on SCHEDULE 10.19 regardless, of whether caused by, or
within the control of, Borrower or any Subsidiary;
(c) (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement, prospectus or offering
memorandum or in any preliminary prospectus or preliminary offering memorandum
or any amendment or supplement to any thereof or in any other writing prepared
in connection with the offer, sale or resale of any securities of Borrower or
any Subsidiary, or (ii) any omission or alleged omission to state therein a
material fact required to be stated or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading; and
(d) (i) any injury to person or damage to property, known or
unknown, reported or unreported, which results from the use of the products of
Borrower or any Subsidiary, or (ii) any obligation or liability arising out of
or with respect to the business or operations of Borrower or any Subsidiary, in
each case whether any of such matters arise before or after the foreclosure of
or other taking of title to all or any portion of the Collateral by Agent or
Lenders;
except for any such Indemnified Liabilities arising, on account of the relevant
Lender Party's gross negligence or willful misconduct and, to the extent that
the foregoing undertaking may be unenforceable for any reason, Borrower agrees
to make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. All
obligations provided for in this SECTION 14.5 shall survive any termination of
this Agreement and shall not be reduced or impaired by any investigation made by
or on behalf of any Lender Party.
SECTION 14.6 SUBMISSION TO JURISDICTION. AGENT AND EACH LENDER MAY
ENFORCE ANY CLAIM ARISING OUT OF THIS AGREEMENT OR THE RELATED DOCUMENTS IN ANY
STATE OR FEDERAL COURT HAVING SUBJECT MATTER JURISDICTION AND LOCATED IN
CHICAGO, ILLINOIS. FOR THE PURPOSE OF ANY ACTION OR PROCEEDING INSTITUTED WITH
RESPECT TO ANY SUCH CLAIM, BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF SUCH COURTS. BORROWER HEREBY IRREVOCABLY DESIGNATES CT
CORPORATION SYSTEM WITH OFFICES ON THE DATE HEREOF AT 000 XXXXX XXXXXXX XXXXXX,
XXXXXXX, XXXXXXXX, TO RECEIVE FOR AND ON BEHALF OF BORROWER SERVICE OF PROCESS
IN ILLINOIS. BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF SAID COURTS BY MAILING A COPY THEREOF, BY REGISTERED MAIL, POSTAGE
PREPAID, TO BORROWER AND AGREES THAT SUCH SERVICE, TO THE FULLEST EXTENT
PERMITTED BY LAW, (i) SHALL BE DEEMED IN
87
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON IT IN ANY SUCH SUIT, ACTION
OR PROCEEDING AND (ii) SHALL BE TAKEN AND HELD TO BE VALID PERSONAL SERVICE
UPON AND PERSONAL DELIVERY TO IT. NOTHING HEREIN CONTAINED SHALL AFFECT THE
RIGHT OF AGENT OR ANY LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR PRECLUDE AGENT OR ANY LENDER FROM BRINGING AN ACTION OR PROCEEDING
IN RESPECT HEREOF IN ANY OTHER COUNTRY, STATE OR PLACE HAVING JURISDICTION
OVER SUCH ACTION. BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT LOCATED IN CHICAGO, ILLINOIS AND ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
SECTION 14.7 GOVERNING LAW. This Agreement and the Notes shall be a
contract made under and governed by the internal laws of the State of Illinois
without regard to conflict of laws principles. Whenever possible each provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of Borrower, any of its Subsidiaries and rights of
Agent and each Lender and any other holder of a Note or Liability expressed
herein or in the Related Documents shall be in addition to and not in limitation
of those provided by applicable law or in any other written instrument or
agreement relating to any of the Liabilities.
SECTION 14.8 SEVERAL OBLIGATIONS; NATURE OF LENDER'S RIGHTS. The
respective obligations of Lenders hereunder are several and not joint and no
Lender shall be the partner or agent of any other Lender (except to the extent
to which Agent is authorized to act as such). No provision contained herein or
in any other Related Document and no course of dealing between the parties shall
be deemed to create any fiduciary relationship between Agent or any Lender and
Borrower or any Subsidiary. The indebtedness of Borrower incurred under each of
the Notes shall be a separate obligation owing to the holder thereof; PROVIDED
that each Lender hereby agrees that it shall have no individual right to seek to
enforce its rights under this Agreement or to realize upon the Collateral, it
being understood and agreed that such rights and remedies may be exercised
solely by Agent for the benefit of Lenders at the direction of the Required
Lenders in accordance with the terms of the Related Documents.
SECTION 14.9 ENTRY INTO AGREEMENT. Borrower represents, warrants
and acknowledges that (i) the relationship between it and Lenders is solely that
of a borrower and a lender, and (ii) Borrower is in sole control of its business
and has entered into this Agreement as its own free act and voluntary deed,
based upon its independent judgment as to its best interests.
SECTION 14.10 LEGAL OPINIONS. Borrower expressly consents to the
rendering of opinions by its counsel and of each other counsel required by Agent
or a Lender to be
88
rendered in connection with the initial closing of the matters contemplated
hereby, and thereafter to be rendered from time to time in connection with
this Agreement or any Related Document, and acknowledges that such opinions,
when so rendered, shall be deemed to be rendered at the request and upon the
instruction of Borrower, which has, and will have (prior to the rendering of
each opinion), consulted with and been advised by such counsel as to the
consequences of such consent, request and instructions.
SECTION 14.11 JURY TRIAL; DAMAGE WAIVER. EACH PARTY HERETO HEREBY
EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER OR RELATED TO OR ARISING OUT OF THIS
AGREEMENT OR ANY RELATED DOCUMENT TO WHICH IT IS A PARTY, OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED DOCUMENT,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY. BORROWER WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION REFERRED TO ABOVE ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.
SECTION 14.12 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon Borrower, Agent and Lenders and their respective successors and
assigns, and shall inure to the benefit of Borrower, Agent and each Lender and
their respective successors and assigns, PROVIDED, HOWEVER, that Borrower shall
have no right to assign its rights or delegate its duties under this Agreement.
FSFP may assign any of its rights under this Agreement and the Related Documents
to its lenders for collateral security purposes. This Agreement and the Related
Documents contain the entire agreement of the parties hereto with respect to the
matters covered hereby.
SECTION 14.13 MARSHALLING. Lenders shall be under no obligation to
xxxxxxxx any assets in favor of Borrower or any other Person or against or in
payment of any or all of the Liabilities.
SECTION 14.14 WAIVERS WITH RESPECT TO OTHER INSTRUMENTS. Borrower
waives presentment, demand and protest and notice of presentment, demand
protest, default, nonpayment, maturity, release, compromise, settlement,
extension, or renewal of any or all commercial paper, Accounts, contract rights,
documents, Instruments, Chattel Paper and guaranties at any time held by Agent
and Lenders on which Borrower may in any way be liable and hereby ratifies and
confirms whatever Agent and Lenders may do regarding the enforcement,
collection, compromise, or release thereof.
SECTION 14.15 RETENTION OF BORROWER'S DOCUMENTS. Agent or any Lender
may destroy or otherwise dispose of all documents, schedules, invoices or other
papers delivered to
89
Agent or any Lender in accordance with its customary practices unless
Borrower requests in writing that same be returned. Upon Borrower's request
and at Borrower's expense, Agent or any Lender shall return such papers held
by it when its actual or anticipated need for same has terminated.
SECTION 14.16 SURVIVAL OF WARRANTIES. All representations and
warranties of Borrower and the Subsidiaries contained in this Agreement or any
of the other Related Documents shall survive the execution and delivery of this
Agreement and the other Related Documents and the making of the Loans.
Notwithstanding anything contained in this Agreement to the contrary, the
provisions of, and the undertakings, indemnifications and agreements of Borrower
set forth in SECTIONS 8, 14.4 and 14.5 shall survive payment of the Liabilities
and termination of this Agreement.
SECTION 14.17 COUNTERPARTS. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of counterparts
and by different parties in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one and the same agreement. Delivery
of an executed counterpart of this Agreement by telecopy or similar electronic
medium shall be equally as effective as delivery of a manually executed
counterpart of this Agreement. Any Person delivering an executed counterpart of
this Agreement by telecopy or similar electronic medium shall also deliver a
manually executed counterpart of this Agreement; PROVIDED that the failure to
deliver a manually executed counterpart shall not affect the validity,
enforceability or binding effect of this Agreement.
SECTION 14.18 EXCEPTIONS TO COVENANTS. Neither Borrower nor any
Subsidiary shall be deemed to be permitted to take any action or omit to take
any action which is permitted as an exception to any of the terms, provisions or
covenants contained in any of the Related Documents if such action or omission
would result in an Event of Default or Unmatured Event of Default or the breach
of any term, provision or covenant contained in any Related Document.
SECTION 14.19 CONSTRUCTION. Borrower acknowledges that it and its
counsel have approved the Related Documents and that the usual rule of
construction to the effect that any ambiguities or inconsistencies are to be
resolved against the drafting Person shall not be applicable in the
interpretation of any of the Related Documents.
SECTION 14.20 REINSTATEMENT. This Agreement shall remain in full
force and effect and continue to be effective or to be reinstated, as the case
may be, if at any time payment and performance of the Liabilities, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Liabilities, whether as
a "voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment or performance had not been made. In the event that any payment,
or any part thereof, is rescinded, reduced, restored or returned, the
Liabilities shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
90
SECTION 14.21 ENTIRE AGREEMENT. This Agreement, including all
Exhibits, Schedules, the Related Documents and other documents attached hereto
or incorporated by reference herein, constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede all other
negotiations, understandings and representations, oral or written, with respect
to the subject matter hereof, including that certain Commitment Letter dated as
of June 3, 1999 between Borrower and FSFP.
SECTION 14.22 ACKNOWLEDGMENT. BORROWER ACKNOWLEDGES THAT IT HAS BEEN
ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY, AND BORROWER ACKNOWLEDGES AND AGREES THAT (I)
EACH OF THE WAIVERS SET FORTH HEREIN WERE KNOWINGLY AND VOLUNTARILY MADE, (II)
THE OBLIGATIONS OF AGENT AND EACH LENDER HEREUNDER, INCLUDING THE OBLIGATION TO
ADVANCE AND LEND FUNDS TO BORROWER IN ACCORDANCE HEREWITH, SHALL BE STRICTLY
CONSTRUED AND SHALL BE EXPRESSLY SUBJECT TO BORROWER'S COMPLIANCE IN ALL
RESPECTS WITH THE TERMS AND CONDITIONS HEREIN SET FORTH, AND (III) NO
REPRESENTATIVE OF AGENT OR ANY LENDER HAS WAIVED OR MODIFIED ANY OF THE
PROVISIONS OF THIS AGREEMENT AS OF THE DATE HEREOF AND NO SUCH WAIVER OR
MODIFICATION FOLLOWING THE DATE HEREOF SHALL BE EFFECTIVE UNLESS MADE IN
ACCORDANCE WITH SECTION 14.1.
SECTION 14.23 CONFIDENTIALITY. Borrower agrees that FSFP may
disclose information relating to Borrower to each of the Master Lenders and the
Master Agents which have agreed to use procedures substantially comparable to
those used by them in respect of non-public information as supplied to them by
or on behalf of FSFP to the extent that such information is not and does not
become publicly available and which FSFP indicates at the time is to be treated
confidentially; PROVIDED, HOWEVER, that each of the Master Lenders, and the
Master Agents, as the case may be, is hereby authorized to deliver a copy of
each or any financial statement of Borrower or any other information relating to
the Loans, or the Collateral, which may be furnished to it hereunder or
otherwise to (a) its legal counsel and auditors and other professional advisors,
(b) governmental or regulatory authorities having jurisdiction over it as may be
required by law, (c) independent financial rating agencies (including, without
limitation the Rating Agencies), (d) any person providing general liquidity or
credit enhancement to the Master Lenders, and (e) (subject to obtaining a
confidentiality agreement containing the foregoing confidentiality restrictions)
any Person to whom a Master Lender proposes to assign all or any part of its
interest or grant a participation in its interest. As used herein: "MASTER
AGENTS" shall mean Citicorp North America, Inc. ("CNAI"), Bank of New York and
any successor thereto or assignee thereof; "MASTER LENDER" shall mean any person
becoming a party "LENDER" to that certain Second Amended and Restated Credit
Agreement dated as of May 24, 1996 (as amended from time to time, the "MASTER
CREDIT AGREEMENT") among First Source Financial, Inc., FSFP, Master Agents and
such Lenders; and "RATING AGENCIES" shall mean Standard and Poor's Ratings
Group, a division of XxXxxx-Xxxx, Inc., and Xxxxx'x Investors Services, Inc.
Borrower further agrees that Agent and any Lender may disclose information
relating to Borrower (i) to any regulatory authority having jurisdiction over
91
Agent or such Lender, as may be required by law, (ii) to any other Person in
connection with a Lender's proposed or actual assignment of, or sale of any
participation in, the Liabilities and (iii) to any other Person in connection
with the exercise of Agent's or any Lender's rights hereunder or under any of
the other Related Documents.
SECTION 15 ASSIGNMENT AND PARTICIPATION; AGENT
SECTION 15.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND NOTES.
Each Lender may assign its rights and delegate its obligations under
this Agreement to another Person; PROVIDED that (a) such Lender shall first
obtain the written consent of Agent, (b) the aggregate amount of the outstanding
Commitment and Loans of the assigning Lender being assigned pursuant to such
assignment (determined as of the date of the Assignment and Acceptance entered
into with respect to such assignment by the assigning Lender and the assignee,
and accepted by Agent, in form and substance satisfactory to Agent, the
assigning Lender and the assignee (the "ASSIGNMENT AND ACCEPTANCE")) shall in no
event, except in the case of an assignment of all of a Lender's rights and
obligations under this Agreement, be less than $5,000,000 of the assigning
Lender's rights and obligations under this Agreement, (c) the parties to each
such assignment shall execute and deliver to Agent, for its acceptance and
recording in the Register (as hereinafter defined), an Assignment and
Acceptance, and (d) Agent shall have received a $3,500 fee from the assigning
Lender for processing such assignment. In the case of an assignment authorized
under this SECTION 15.1, the assignee shall have, to the extent of such
assignment, the same rights, benefits and obligations as it would if it were a
Lender hereunder and the assigning Lender shall be relieved of its obligations
hereunder with respect to its Commitment to the extent of such assignment.
Borrower hereby acknowledges and agrees that any assignment will give rise to a
direct obligation of Borrower to the assignee and that the assignee shall be
considered to be a "Lender".
Agent shall maintain a copy of each Assignment and Acceptance delivered to
and accepted by it and books and records, including computer records, in which
it shall record the names and addresses of Lenders and the Commitment of, and
principal amount of the Loans owing to, each Lender from time to time (the
"REGISTER"). The entries in the Register shall constitute rebuttably
presumptive evidence, absent manifest error, of the accuracy of the information
contained therein, and Borrower, Agent and Lenders may treat each Person the
name of which is recorded in the Register as a Lender hereunder for all purposes
of this Agreement. The Register shall be available for inspection by any Lender
or Borrower at any reasonable time and from time to time upon reasonable prior
notice.
Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender and an assignee, together with the Notes subject to such assignment,
Agent shall, if such Assignment and Acceptance has been completed, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register, and (iii) give prompt notice thereof to Borrower. Within five (5)
Business Days after Borrower's receipt of such notice, Borrower, at its own
expense, will execute and deliver to Agent in exchange for the surrendered
Notes, new Notes, to the order of
92
such assignee in amounts corresponding to the interest in the assigning
Lender's rights and obligations under this Agreement acquired by such
assignee pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained an interest in such rights and obligations hereunder, new
Notes to the order of the assigning Lender in amounts corresponding to such
interest retained by it hereunder. Such Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Notes, shall be dated the effective date of such Assignment and Acceptance
and shall otherwise be in substantially the forms of EXHIBITS C and D as
applicable. Upon delivery of such new Notes, the surrendered Notes shall be
canceled by Agent and returned to Borrower.
Each Lender may sell participations in all or any part of any Loans and
Letters of Credit made by it to another Person; PROVIDED that all amounts
payable by Borrower hereunder shall be determined as if that Lender had not sold
such participation and the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except action directly affecting (a) any reduction in the principal amount,
interest rate or fees payable with respect to any Loan in which such holder
participates; (b) any extension of the final scheduled maturity date of the
principal amount of the Loans in which such holder participates; and (c) any
release of any Collateral (other than in accordance with the terms of this
Agreement or the Related Documents). Borrower hereby acknowledges and agrees
that any participation will give rise to a direct obligation of Borrower to the
participant, and the participant shall solely for the purpose of SECTIONS 2.11
and 14.5 be considered to be a "LENDER".
Except as otherwise provided in this SECTION 15.1 no Lender shall, as
between Borrower and that Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment, transfer or negotiation of, or
granting of participation in, all or any part of the Loans, the Notes or other
Liabilities owed to such Lender. Each Lender may furnish any information
concerning Borrower in the possession of that Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject to such Lender's confidentiality obligations.
93
SECTION 15.2 AGENT.
15.2.1 APPOINTMENT OF AGENT.
(a) Each Lender hereby designates FSFP as Agent to act as
herein specified. Each Lender hereby irrevocably authorizes, and each
holder of any Note or participation in any Letter of Credit and LC Guaranty
by the acceptance of a Note or participation shall be deemed irrevocably to
authorize, Agent to take such action on its behalf under the provisions of
this Agreement and the Notes, the other Related Documents and any other
instruments and agreements referred to herein and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. Agent shall hold all
Collateral and all payments of principal, interest, fees, charges and
expenses received pursuant to this Agreement or any other Related Documents
for the benefit of Lenders to be distributed as provided herein. Agent may
perform any of its duties hereunder by or through its agents or employees.
(b) The provisions of this SECTION 15.2 are solely for the
benefit of Agent and Lenders, and Borrower shall not have any rights as a
third party beneficiary of any of the provisions hereof (other than
SUBSECTION 15.2.9) nor shall Borrower have any obligations under this
SECTION 15.2. In performing its functions and duties under this Agreement,
Agent shall act solely as agent of Lenders and does not assume and shall
not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for Borrower.
15.2.2 NATURE OF DUTIES OF AGENT. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
other Related Documents. Neither Agent nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted by it
as such hereunder or in connection herewith, unless caused by its or their
own gross negligence or willful misconduct. The duties of Agent shall be
mechanical and administrative in nature; Agent shall not have by reason of
this Agreement or the other Related Documents a fiduciary relationship in
respect of any Lender; and nothing in this Agreement or the other Related
Documents, expressed or implied, is intended to or shall be so construed as
to impose upon Agent any obligations in respect of this Agreement or the
other Related Documents except as expressly set forth herein or therein.
15.2.3 LACK OF RELIANCE ON AGENT.
(a) Independently and without reliance upon Agent, each
Lender, to the extent it deems appropriate, has made and shall continue to
make (i) its own independent investigation of the financial or other
condition and affairs of Borrower in connection with the taking or not
taking of any action in connection herewith and (ii) its own appraisal of
the creditworthiness of Borrower, and, except as expressly provided in this
Agreement, Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any
94
Lender with any credit or other information with respect thereto, whether
coming into its possession before the making of any Loan, Advance or
issuance of any Letter of Credit or LC Guaranty or at any time or times
thereafter.
(b) Agent shall not be responsible to any 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, collectibility, priority or sufficiency of this Agreement,
the Notes or other Related Documents or the financial or other condition of
Borrower. Agent shall not be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Agreement, the Notes or any of the other Related
Documents, or the financial condition of Borrower, or the existence or
possible existence of any Unmatured Event of Default or Event of Default,
unless specifically requested to do so in writing by any Lender.
15.2.4 CERTAIN RIGHTS OF AGENT. Agent shall have the right to
request instructions from the Required Lenders at any time. If Agent shall
request instructions from the Required Lenders with respect to any act or
action (including the failure to act) in connection with this Agreement or
any of the other Related Documents, Agent shall be entitled to refrain from
such act or taking such action unless and until Agent shall have received
instructions from the Required Lenders, and Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing,
no Lender shall have any right of action whatsoever against Agent as a
result of Agent acting or refraining from acting hereunder in accordance
with the instructions of the Required Lenders.
15.2.5 RELIANCE BY AGENT. 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 documentary, teletransmission or
telephone message believed by it to be genuine and correct and to have been
signed, sent or made by the proper person. Agent may consult with legal
counsel (including counsel for Borrower with respect to matters concerning
Borrower), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken by it
in good faith in accordance with the advice of such counsel, accountants or
experts.
15.2.6 INDEMNIFICATION OF AGENT. To the extent that Agent is not
reimbursed and indemnified by Borrower, Lenders will reimburse and
indemnify Agent for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses,
advances or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against Agent in any way relating to or
arising out of this Agreement or any of the Related Documents or any action
taken or omitted to be taken by Agent under this Agreement or the Related
Documents, in proportion to each Lender's Pro Rata Share, including,
without limitation, Agent Advances made pursuant to SECTION 15.3.
95
The obligations of Lenders under this SECTION 15.2 shall survive the
payment in full of the Loans and the termination of this Agreement.
15.2.7 AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
obligation to lend under this Agreement, any Loans made by it and the Notes
issued to it, and its participation in Letters of Credit or LC Guaranty
issued hereunder, or its issuance as the Issuing Bank of any Letter of
Credit or LC Guaranty, Agent in its individual capacity shall have the same
rights and powers hereunder as any other Lender or holder of a Note or
participation interests or the Issuing Bank, as the case may be and may
exercise the same as though it was not performing the duties specified
herein; and the terms "Lenders," "Required Lenders," "holders of Notes, "
or "Issuing Bank" or any similar terms shall, unless the context clearly
otherwise indicates, include Agent in its individual capacity. Agent in
its individual capacity may accept deposits from, lend money to, acquire
equity interests in, and generally engage in any kind of banking, trust,
financial advisory or other business with Borrower or any Affiliate of
Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from Borrower for services in
connection with this Agreement and otherwise without having to account for
the same to Lenders.
15.2.8 HOLDERS OF NOTES. Agent may deem and treat the original
named payee of any Note as the owner thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof shall have
been filed with Agent. Any request, authority or consent of any Person
who, at the time of making such request or giving such authority or
consent, is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
15.2.9 SUCCESSOR AGENT.
(a) Agent may, upon five (5) Business Days' notice to
Lenders and Borrower, resign at any time (effective upon the appointment of
a successor Agent pursuant to the provisions of this SECTION 15.2.9) by
giving written notice thereof to Lenders and Borrower. Upon any such
resignation, the Required Lenders shall have the right, upon five (5) days'
notice and approval by Borrower (which approval shall not be unreasonably
withheld), to appoint a successor Agent. If no successor Agent (i) shall
have been so appointed by the Required Lenders, and (ii) shall have
accepted such appointment, within thirty (30) days after the retiring
Agent's giving of notice of resignation, then, upon five (5) days' notice,
the retiring Agent may, on behalf of Lenders, appoint a successor Agent.
(b) Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring
Agent's resignation hereunder as Agent, the provisions of this SECTION 15.2
shall inure to its
96
benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
15.2.10 COLLATERAL MATTERS.
(a) Each Lender authorizes and directs Agent to enter into
any Collateral Documents and other Related Documents for the benefit of
Lenders. Each Lender hereby agrees, and each holder of any Note by the
acceptance thereof will be deemed to agree, that, except as otherwise set
forth herein, any action taken by the Required Lenders in accordance with
the provisions of this Agreement or the Related Documents and the exercise
by the Required Lenders of the powers set forth herein or therein, together
with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of Lenders. Agent is hereby authorized on
behalf of all of Lenders, without the necessity of any notice to or further
consent from any Lender, from time to time, to take any action with respect
to any Collateral or Related Documents which may be necessary to perfect
and maintain perfected the security interest in and Liens upon the
Collateral granted pursuant to any of the Related Documents.
(b) Lenders hereby authorize Agent to release any Lien
granted to or held by Agent upon any Collateral upon termination of this
Agreement and the Commitments and payment and satisfaction of all of the
Liabilities at any time arising under or in respect of this Agreement and
the other Related Documents or the transactions contemplated hereby or
thereby. In addition, Lenders hereby authorize Agent to release any Lien
granted to or held by Agent upon any Collateral (i) constituting property
being sold or disposed of upon receipt of the proceeds of such sale by
Agent if Borrower certifies to Agent that the sale or disposition is made
in compliance with this Agreement (and Agent may rely conclusively on any
such certificate, without further inquiry), or (ii) constituting Collateral
with a value as certified to Agent by Borrower of less than 10% of the
value of all Collateral in the aggregate in any Fiscal Year (and Agent may
rely conclusively on any such certificate, without further inquiry). Upon
request by Agent at any time, Lenders will confirm in writing Agent's
authority to release particular types or items of Collateral pursuant to
this SECTION 15.2.10.
(c) Upon the release of any Lien in accordance with SECTION
15.2.10(b), and upon at least five (5) Business Days' prior written request
by Borrower, Agent shall (and is hereby irrevocably authorized by Lenders
to) execute such documents as may be necessary to evidence the release of
such Liens; PROVIDED that (i) Agent shall not be required to execute any
such document on terms which, in Agent's reasonable opinion, would expose
Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty and (ii) such
release shall not in any manner discharge, affect or impair the Liabilities
or any Liens upon (or obligations of Borrower in respect of) all interests
retained by Borrower, including (without limitation) the proceeds of the
sale, all of which shall continue to constitute part of the Collateral. In
the event of any sale or transfer of Collateral, or any foreclosure with
respect to any of the Collateral, Agent shall be
97
authorized to deduct all of the expenses reasonably incurred by Agent from
the proceeds of any such sale, transfer or foreclosure.
(d) Agent shall have no obligation whatsoever to Lenders or
to any other Person to assure that the Collateral exists or is owned by
Borrower or any other Person or is cared for, protected or insured or that
the Liens granted to Agent herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or
entitled to any particular priority, or to exercise or to continue
exercising at all or in any manner or under any duty of care, disclosure or
fidelity any of the rights, authorities and powers granted or available to
Agent in this SECTION 15.2.10 or in any of the Related Documents, it being
understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, Agent may act in any manner it may deem
appropriate, in its sole discretion, given Agent's own interest in the
Collateral as one of Lenders and that Agent shall have no duty or liability
whatsoever to Lenders, except for its gross negligence or willful
misconduct.
15.2.11 ACTIONS WITH RESPECT TO DEFAULTS. In addition to Agent's
right to take actions on its own accord as permitted under this Agreement,
Agent shall take such action with respect to an Unmatured Event of Default
or Event of Default as shall be directed by the Required Lenders; PROVIDED
that until Agent shall have received such directions, Agent may (but shall
not be obligated to) take such action, or refrain from taking such action,
with respect to such Unmatured Event of Default or Event of Default as it
shall deem advisable.
15.2.12 DELIVERY OF INFORMATION. Agent shall not be required to
deliver to any Lender originals or copies of any documents, instruments,
notices, communications or other information received by Agent from
Borrower, the Required Lenders, any Lender or any other Person under or in
connection with this Agreement or any other Related Document except (i) as
specifically provided in this Agreement or any other Related Document and
(ii) as specifically requested from time to time in writing by any Lender
with respect to a specific document, instrument, notice or other written
communication received by and in the possession of Agent at the time of
receipt of such request and then only in accordance with such specific
request.
SECTION 15.3 DISBURSEMENT OF FUNDS. Agent may, on behalf of
Lenders, make such disbursements and advances ("AGENT ADVANCES") pursuant to
this Agreement and the Related Documents which Agent, in its sole discretion,
deems necessary or desirable to preserve or protect the Collateral, or any
portion thereof, in order to enhance the likelihood of, or maximize the amount
of, repayment by Borrower, or any guarantor or other Person, of the Loans and
other Liabilities or to pay any other amount chargeable to Borrower pursuant to
the terms of this Agreement, including, without limitation, costs, fees and
expenses as described in SECTION 14.4. Agent Advances shall be repayable on
demand and be secured by the Collateral. Agent Advances shall constitute
Revolving Loans and shall otherwise constitute Liabilities to pay principal
hereunder and shall bear interest at the rate applicable to the Prime Rate
Revolving Loans. Agent shall notify each Lender in writing of each such Agent
Advance, which notice shall include a description of the
98
purpose of such Agent Advance. Without limitation of any of its obligations
under this Agreement, each Lender agrees that it shall make available to
Agent, upon Agent's demand, in immediately available funds, an amount equal
to such Lender's Pro Rata Share of each such Agent Advance. If such funds
are not made available to Agent by such Lender within one (1) Business Day
after Agent's demand therefor, Agent will be entitled to recover any such
amount from such Lender together with interest thereon at the Federal Funds
Rate for each day during the period commencing on the date of such demand and
ending on the date such amount is received. Each Lender shall reimburse
Agent on demand for all Loans disbursed on its behalf by Agent, or if Agent
so requests, each Lender will remit to Agent its Pro Rata Share of any Loan
before Agent disburses same to Borrower. If any Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall
promptly notify Borrower, and Borrower shall immediately repay such amount to
Agent. Nothing in this SECTION 15.3 shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its Commitments hereunder or to prejudice any rights
that Borrower may have against any Lender as a result of any default by such
Lender hereunder.
SECTION 15.4 AGENT'S DISCRETION. In the event Borrower is unable
to comply with (a) the Borrowing Base limitations applicable to it set forth in
SECTION 2 or (b) the conditions precedent to the making of a Revolving Loan,
Lenders authorize Agent, in its sole discretion, to make Revolving Loans (and
Lenders shall fund their Pro Rata Share of such Revolving Loans upon the request
of Agent) ("INTERIM REVOLVING LOANS") for a period commencing on the date Agent
first receives a request for an Interim Revolving Loan until the earlier of (i)
the 30th day after such date, or (ii) the date Borrower is again able to comply
with the Borrowing Base limitations applicable to it and the conditions
precedent to the making of Revolving Loans set forth in SECTIONS 2 and 12, or
obtains an amendment or waiver with respect thereto (in each case, the "INTERIM
REVOLVING LOAN PERIOD"). Agent shall not, in any event, make any Interim
Revolving Loan if at such time the amount of such Interim Revolving Loan when
added to the then aggregate outstanding principal amount of other Interim
Revolving Loans made to all Borrowers would exceed 10% of the amount of the
Revolving Commitment; provided that nothing in this SECTION 15.4 shall limit
Agent's right to make Agent Advances; PROVIDED FURTHER that, after giving effect
to any Interim Revolving Loan, the aggregate outstanding principal amount of the
Total Revolving and LC Exposure shall not exceed the aggregate Commitments. All
Interim Revolving Loans shall be Prime Rate Loans. An Interim Revolving Loan
shall cease to be an Interim Revolving Loan (and shall be deemed to be an
Advance consisting of Revolving Loans) if the unsatisfied conditions giving rise
to such Interim Revolving Loan shall thereafter be satisfied or the events which
cause such Loan to be an Interim Revolving Loan shall thereafter cease to exist.
The provisions of this SECTION 15.4 are solely for the benefit of Agent and
Lenders, and Borrower shall not have any rights as a third-party beneficiary of
any of the provisions hereof.
[remainder of this page intentionally left blank]
99
Delivered at Chicago, Illinois, as of the day and year first above written.
FIRST SOURCE FINANCIAL LLP, individually and
as Agent
By: First Source Financial, Inc.
Its: Manager
By:
-----------------------------------------
Name Printed:
-------------------------------
Its:
----------------------------------------
0000 Xxxx Xxxx Xxxx - Xxxxx Xxxxx
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Contract Administration
Telecopy: (000) 000-0000, 7911
Telephone: (000) 000-0000
XXXXX NATURALS/4HEALTH, INC., as Borrower
By:
-----------------------------------------
Name Printed:
-------------------------------
Its:
----------------------------------------
00000 Xxxx Xxxxxxxxx Xxxxxxxxx
Xxxxxx Xxxx, XX 00000
Attention: President
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
