EXHIBIT 10.43
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LOAN AGREEMENT
BY AND AMONG
SOURCE INTERLINK COMPANIES, INC.
AND
EACH OF ITS SUBSIDIARIES THAT ARE NAMED HEREIN AS BORROWERS
AS BORROWERS,
EACH OF ITS SUBSIDIARIES THAT ARE NAMED HEREIN AS GUARANTORS
AS GUARANTORS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
HILCO CAPITAL LP
AS THE AGENT
DATED AS OF OCTOBER 30, 2003
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION............................................................................ 1
1.1. DEFINITIONS.................................................................................... 1
1.2. ACCOUNTING TERMS............................................................................... 25
1.3. CODE........................................................................................... 25
1.4. CONSTRUCTION................................................................................... 26
1.5. SCHEDULES AND EXHIBITS......................................................................... 26
2. LOAN AND TERMS OF PAYMENT............................................................................... 26
2.1. [Intentionally Omitted]........................................................................ 26
2.2. TERM LOAN...................................................................................... 26
2.3. BORROWING PROCEDURES AND SETTLEMENTS........................................................... 26
2.4. PAYMENTS....................................................................................... 27
2.5. [Intentionally Omitted]........................................................................ 30
2.6. INTEREST RATES: RATES, PAYMENTS, AND CALCULATIONS............................................. 30
2.7. CASH MANAGEMENT................................................................................ 31
2.8. CREDITING PAYMENTS............................................................................. 33
2.9. [Intentionally Omitted]........................................................................ 33
2.10. MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS......................................... 33
2.11. FEES ............................................................................. 33
2.12. [Intentionally Omitted]........................................................................ 34
2.13. [Intentionally Omitted]........................................................................ 34
2.14. CAPITAL REQUIREMENTS........................................................................... 34
2.15. JOINT AND SEVERAL LIABILITY OF BORROWERS....................................................... 34
3. CONDITIONS; TERM OF AGREEMENT........................................................................... 37
3.1. CONDITIONS PRECEDENT TO THE TERM LOAN.......................................................... 37
3.2. CONDITIONS SUBSEQUENT TO THE TERM LOAN......................................................... 43
3.3. [Intentionally Omitted]........................................................................ 44
3.4. TERM........................................................................................... 44
3.5. EFFECT OF TERMINATION.......................................................................... 44
4. [INTENTIONALLY OMITTED]................................................................................. 44
5. REPRESENTATIONS AND WARRANTIES.......................................................................... 44
5.1. NO ENCUMBRANCES................................................................................ 44
5.2. ELIGIBLE ACCOUNTS.............................................................................. 44
5.3. BUSINESS SEGMENTS.............................................................................. 45
5.4. ELIGIBLE EQUIPMENT............................................................................. 45
5.5. LOCATION OF INVENTORY AND EQUIPMENT............................................................ 45
5.6. INVENTORY RECORDS.............................................................................. 45
5.7. STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN;
ORGANIZATIONAL ID NUMBER; COMMERCIAL TORT CLAIMS............................................... 45
5.8. DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES............................................... 45
5.9. DUE AUTHORIZATION; NO CONFLICT................................................................. 46
5.10. LITIGATION ............................................................................. 47
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5.11. NO MATERIAL ADVERSE CHANGE..................................................................... 47
5.12. FRAUDULENT TRANSFER............................................................................ 47
5.13. EMPLOYEE BENEFITS.............................................................................. 48
5.14. ENVIRONMENTAL CONDITION........................................................................ 49
5.15. BROKERAGE FEES................................................................................. 49
5.16. INTELLECTUAL PROPERTY.......................................................................... 49
5.17. LEASES......................................................................................... 50
5.18. DDAS........................................................................................... 50
5.19. COMPLETE DISCLOSURE............................................................................ 50
5.20. INDEBTEDNESS................................................................................... 50
5.21. REGULATION U................................................................................... 50
5.22. PERMITS, ETC................................................................................... 50
5.23. MATERIAL CONTRACTS............................................................................. 51
5.24. EMPLOYEE AND LABOR MATTERS..................................................................... 51
5.25. CUSTOMERS AND SUPPLIERS........................................................................ 51
5.26. COMMON STOCK PRICE............................................................................. 51
5.27. REAFFIRMATION.................................................................................. 51
5.28. PAYMENTS TO EMPLOYEES AND OTHERS............................................................... 51
5.29. WITHHOLDINGS AND REMITTANCES................................................................... 52
6. AFFIRMATIVE COVENANTS................................................................................... 52
6.1. ACCOUNTING SYSTEM.............................................................................. 52
6.2. COLLATERAL REPORTING........................................................................... 52
6.3. FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.................................................... 55
6.4. GUARANTOR REPORTS.............................................................................. 58
6.5. RETURNS........................................................................................ 58
6.6. MAINTENANCE OF PROPERTIES...................................................................... 58
6.7. TAXES.......................................................................................... 58
6.8. INSURANCE...................................................................................... 59
6.9. LOCATION OF INVENTORY AND EQUIPMENT............................................................ 60
6.10. COMPLIANCE WITH LAWS........................................................................... 60
6.11. LEASES......................................................................................... 60
6.12. EXISTENCE...................................................................................... 60
6.13. ENVIRONMENTAL.................................................................................. 60
6.14. DISCLOSURE UPDATES............................................................................. 61
6.15. FORMATION OF SUBSIDIARIES...................................................................... 61
6.16. PROGRAM CONTRACTS.............................................................................. 62
6.17. UNIVERSAL CIRCULATION.......................................................................... 62
6.18. SEARCH REPORT.................................................................................. 62
6.19. EXPENSE DEPOSIT................................................................................ 62
7. NEGATIVE COVENANTS...................................................................................... 63
7.1. INDEBTEDNESS................................................................................... 63
7.2. LIENS.......................................................................................... 64
7.3. RESTRICTIONS ON FUNDAMENTAL CHANGES............................................................ 64
7.4. DISPOSAL OF ASSETS............................................................................. 64
7.5. CHANGE NAME.................................................................................... 65
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7.6. NATURE OF BUSINESS............................................................................. 65
7.7. PREPAYMENTS AND AMENDMENTS..................................................................... 65
7.8. CHANGE OF CONTROL.............................................................................. 65
7.9. CONSIGNMENTS................................................................................... 65
7.10. DISTRIBUTIONS.................................................................................. 65
7.11. ACCOUNTING METHODS............................................................................. 65
7.12. INVESTMENTS .................................................................................. 66
7.13. TRANSACTIONS WITH AFFILIATES................................................................... 66
7.14. SUSPENSION ............................................................................. 66
7.15. [INTENTIONALLY OMITTED]........................................................................ 66
7.16. USE OF PROCEEDS................................................................................ 66
7.17. EQUIPMENT WITH BAILEES......................................................................... 66
7.18. FINANCIAL COVENANTS............................................................................ 67
7.19. REVOLVER LOAN AGREEMENT........................................................................ 69
7.20. BUSINESS SEGMENTS.............................................................................. 70
8. EVENTS OF DEFAULT....................................................................................... 70
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.................................................................. 73
9.1. RIGHTS AND REMEDIES............................................................................ 73
9.2. REMEDIES CUMULATIVE............................................................................ 73
10. TAXES AND EXPENSES...................................................................................... 73
11. WAIVERS; INDEMNIFICATION................................................................................ 74
11.1. DEMAND; PROTEST; ETC........................................................................... 74
11.2. THE LENDER GROUP'S LIABILITY FOR COLLATERAL.................................................... 74
11.3. INDEMNIFICATION................................................................................ 74
11.4. ENVIRONMENTAL INDEMNITY........................................................................ 75
12. NOTICES................................................................................................. 75
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.............................................................. 76
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.............................................................. 77
14.1. ASSIGNMENTS AND PARTICIPATIONS................................................................. 77
14.2. SUCCESSORS ............................................................................. 80
15. AMENDMENTS; WAIVERS..................................................................................... 80
15.1. AMENDMENTS AND WAIVERS......................................................................... 80
15.2. REPLACEMENT OF HOLDOUT LENDER.................................................................. 81
15.3. NO WAIVERS; CUMULATIVE REMEDIES................................................................ 81
16. AGENT; THE LENDER GROUP................................................................................. 81
16.1. APPOINTMENT AND AUTHORIZATION OF AGENT......................................................... 81
16.2. DELEGATION OF DUTIES........................................................................... 82
16.3. LIABILITY OF AGENT............................................................................. 82
16.4. RELIANCE BY AGENT.............................................................................. 83
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16.5. NOTICE OF DEFAULT OR EVENT OF DEFAULT.......................................................... 83
16.6. CREDIT DECISION................................................................................ 83
16.7. COSTS AND EXPENSES; INDEMNIFICATION............................................................ 84
16.8. AGENT IN INDIVIDUAL CAPACITY................................................................... 84
16.9. SUCCESSOR AGENT................................................................................ 85
16.10. LENDER IN INDIVIDUAL CAPACITY.................................................................. 85
16.11. WITHHOLDING TAXES.............................................................................. 86
16.12. COLLATERAL MATTERS............................................................................. 87
16.13. RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS........................................ 88
16.14. AGENCY FOR PERFECTION.......................................................................... 89
16.15. PAYMENTS BY AGENT TO THE LENDERS............................................................... 89
16.16. CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS........................................... 89
16.17. FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION.......................................... 89
16.18. SEVERAL OBLIGATIONS; NO LIABILITY.............................................................. 90
17. GENERAL PROVISIONS...................................................................................... 91
17.1. EFFECTIVENESS ................................................................................. 91
17.2. SECTION HEADINGS............................................................................... 91
17.3. INTERPRETATION................................................................................. 91
17.4. SEVERABILITY OF PROVISIONS..................................................................... 91
17.5. AMENDMENTS IN WRITING.......................................................................... 91
17.6. COUNTERPARTS; TELEFACSIMILE EXECUTION.......................................................... 91
17.7. REVIVAL AND REINSTATEMENT OF OBLIGATIONS....................................................... 91
17.8. CONFIDENTIALITY................................................................................ 92
17.9. INTEGRATION ............................................................................. 92
17.10. PARENT AS AGENT FOR BORROWERS.................................................................. 93
17.11. LENDER ADVERTISING............................................................................. 93
18. GUARANTY................................................................................................ 93
18.1. GUARANTY; LIMITATION OF LIABILITY.............................................................. 93
18.2. GUARANTY ABSOLUTE.............................................................................. 94
18.3. WAIVER......................................................................................... 94
18.4. CONTINUING GUARANTY; ASSIGNMENTS............................................................... 95
18.5. SUBROGATION.................................................................................... 95
18.6. JOINT AND SEVERAL OBLIGATIONS.................................................................. 95
18.7. JUDGMENT CURRENCY.............................................................................. 96
18.8. CONFLICTS...................................................................................... 96
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit N-1 Form of Promissory Note
Exhibit P-1 Form of Program Contracts
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule G-1 Guarantors
Schedule L-1 Leased Real Property Locations
Schedule L-2 Litigation Searches
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule S-1 Subsidiaries and Business Segments
Schedule S-2 Specified Tax Refunds
Schedule 2.7(a) Cash Management Banks
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7(a) States of Organization
Schedule 5.7(b) Chief Executive Offices
Schedule 5.7(c) XXXXX
Schedule 5.7(d) Commercial Tort Claims
Schedule 5.8(b) Capitalization of Loan Parties
Schedule 5.10 Litigation
Schedule 5.13 ERISA
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Deposit Accounts and Securities Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 5.23 Material Contracts
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LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement"), is entered into as of
October 30, 2003, by and among, on the one hand, the lenders identified on the
signature pages hereof (such lenders, together with their respective successors
and permitted assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), HILCO CAPITAL LP., a Delaware
limited partnership, as agent for the Lenders ("Agent"), and, on the other hand,
SOURCE INTERLINK COMPANIES, INC., a Missouri corporation ("Parent"), each of
Parent's Subsidiaries identified on the signature pages hereof as "Borrowers"
(such Subsidiaries, together with Parent, are referred to hereinafter each
individually as a "Borrower", and individually and collectively, jointly and
severally, as the "Borrowers"), and each of Parent's Subsidiaries identified on
the signature pages hereof as "Guarantors" (such Subsidiaries are referred to
hereinafter each individually as a "Guarantor", and individually and
collectively, jointly and severally, as the "Guarantors ") .
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following definitions:
"Account" means an account (as that term is defined in the
Code), and any and all supporting obligations in respect thereof.
"Account Debtor" means any Person who is obligated under, with
respect to, or on account of, an Account, chattel paper, or a General
Intangible.
"Acquisition" means the acquisition of (i) all or
substantially all of the Stock of any Person, or (ii) all or substantially all
of the assets of any Person or the assets comprising any material line of
business of such Person.
"Administrative Borrower" has the meaning set forth in Section
17.10.
"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, for purposes of Section 7.13 hereof: (a) any Person
which owns directly or indirectly 10% or more of the Stock having ordinary
voting power for the election of directors or other members of the governing
body of a Person or 10% or more of the partnership or other ownership interests
of a Person (other than as a limited partner of such Person) shall be deemed an
Affiliate of such Person, (b) each director (or comparable manager) of a Person
shall be deemed to be an Affiliate of such Person, and (c) each partnership or
joint venture in which a Person is a partner or joint venturer shall be deemed
an Affiliate of such Person.
"Agent" means Hilco, in its capacity as agent hereunder, and
any successor thereto.
"Agent-Related Persons" means Agent, together with its
Affiliates, officers, directors, employees, attorneys, and agents.
"Agent's Account" means the Deposit Account of Agent
identified on Schedule A-1.
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Applicable Excess Cash Flow Percentage" means, with respect
to Excess Cash Flow for any Fiscal Year of the Parent, the percentage of Excess
Cash Flow set forth below opposite the applicable Total Debt Ratio as of the
last day of such Fiscal Year, as determined by Agent based upon the Loan
Parties' financial statements delivered to Agent and Lenders pursuant to Section
6.3(b) for such Fiscal Year:
Total Debt Ratio Percentage of Excess Cash Flow
---------------- ------------------------------
3.0 to 1.0 or higher 25%
Lower than 3.0 to 1.0 but
higher than or equal
to 2.5 to 1.0 15%
Lower than 2.5 to 1.0 but
higher than or equal
to 2.0 to 1.0 10%
Lower than 2.0 to 1.0 0%
provided, that, notwithstanding the foregoing, if the Loan Parties fail to
deliver financial statements to the Agent and the Lenders for any Fiscal Year in
accordance with Section 6.3(b), then until such financial statements are
delivered, the Applicable Excess Cash Flow Percentage shall be 25%.
"Appraised Value" means the net forced liquidation value (net
of liquidation expenses) of any Equipment or the net fair market value (net of
liquidation expenses) of any Real Property Collateral, in each case, determined
by the most recent appraisal performed by a qualified independent appraiser
selected by Agent, which appraisal is in form and substance satisfactory to
Agent.
"Assignee" has the meaning set forth in Section 14.1(a).
"Assignment and Acceptance" means an Assignment and Acceptance
Agreement substantially in the form of Exhibit A-1.
"Authorized Person" means any officer or employee of
Administrative Borrower.
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"Availability Reserves" means reserves against the Borrowing
Base established by the Agent in good faith upon clear and convincing evidence
that one of the following events has caused a material increase in the risk of
loss borne by the Lenders in connection with the Term Loan : (i) a material
diminution in the value of any Eligible Equipment and/or Eligible Real Property
Collateral, as determined by an appraisal conducted by an unaffiliated appraiser
more than 13 months after the most recent appraisal conducted at the request of
the Revolver Agent, (ii) the termination of any Material Contract as a result of
the breach thereof by any Loan Party and (iii) a material deterioration in
margin, expenses and/or sales of the Loan Parties based upon reports provided by
the Loan Parties to the Agent which the Agent reasonably believes raises a
substantial likelihood that a violation of the Senior Debt Ratio set forth in
Section 7.18(b) is imminent.
"Bankruptcy Code" means, as applicable, (i) the United States
Bankruptcy Code, (ii) the Bankruptcy and Insolvency Act (Canada) or (iii) the
Companies' Creditors Arrangement Act (Canada), or any similar legislation in a
relevant jurisdiction, in each case as in effect from time to time.
"Xxxxxx and Noble" means, collectively, Xxxxxx and Xxxxx, Inc.
and each of its Affiliates.
"Base Rate" means, the rate of interest announced, from time
to time, within LaSalle Bank National Association at its principal office in
Chicago as its "prime rate", with the understanding that the "prime rate" is one
of LaSalle Bank National Association's base rates (not necessarily the lowest of
such rates) and serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto and is evidenced by the
recording thereof after its announcement in such internal publications as
LaSalle Bank National Association may designate.
"Base Rate Margin" means 7.75 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) or a benefit plan under Canadian Employee Benefit Laws
for which any Loan Party or any Subsidiary or ERISA Affiliate of any Loan Party
has been an "employer" (as defined in Section 3(5) of ERISA) or has held
equivalent status under Canadian Employee Benefit Laws within the past six
years.
"Board of Directors" means the board of directors (or
comparable managers) of Parent or any committee thereof duly authorized to act
on behalf of the board of directors (or comparable managers).
"Books" means all of Administrative Borrower's and its
Subsidiaries' now owned or hereafter acquired books and records (including all
of their Records indicating, summarizing, or evidencing their assets (including
the Collateral) or liabilities, all of Administrative Borrower's and its
Subsidiaries' Records relating to their business operations or financial
condition, and all of their goods or General Intangibles related to such
information).
"Borders" means, collectively, Borders Group, Inc. and each of
its Affiliates.
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"Borrower" and "Borrowers" have the respective meanings set
forth in the preamble to this Agreement.
"Borrowing Base" has the meaning set forth in the Revolver
Loan Agreement.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which banks are authorized or required to close in the State of
New York or the State of Illinois.
"Business Segment" means any of the Fulfillment Business
Segments, the In-Store Services Business Segments or the Wood Manufacturing
Business Segments.
"Canadian Documents" means the Canadian Security Agreements,
the Canadian Pledge Agreement and the Canadian Guaranties.
"Canadian Employee Benefits Laws" means the Canadian Pension
Plan Act (Canada), the Pension Benefit Act (Ontario), the Pension Benefits
Standards Act (British Columbia), the Health Insurance Act (Ontario), the
Employment Standards Act (British Columbia), the Employment Standard Act
(Ontario), and any federal, provincial or local counterparts or equivalents, in
each case, as amended from time to time.
"Canadian Guaranties" means those certain Guaranties executed
and delivered by the Canadian Guarantors in favor of Agent, for the benefit of
Lender Group, in form and substance satisfactory to Agent.
"Canadian Guarantors" means collectively the Subsidiaries of
Parent named in Part I of Schedule G-1.
"Canadian Income Tax Act" means the Income Tax Act (Canada),
R.S.C. 1985 C.1 (5th Supp), as amended.
"Canadian Pledge Agreement" means that certain Pledge
Agreement executed and delivered by the Parent and The Source-Canada Corp. in
favor of Collateral Agent, for the benefit of Lender Group and the Revolver
Lender Group, in form and substance satisfactory to Agent.
"Canadian Security Agreements" means those certain Security
Agreements executed and delivered by the Canadian Guarantors in favor of
Collateral Agent, for the benefit of Lender Group and the Revolver Lender Group,
in form and substance satisfactory to Agent.
"Capital Expenditures" means, with respect to the Parent and
its Subsidiaries for any period, the sum of (a) the aggregate of all
expenditures by the Parent and its Subsidiaries during such period that are
capital expenditures as determined in accordance with GAAP, whether such
expenditures are paid in cash or financed, and (b) to the extent not covered by
clause (a), the aggregate of all expenditures by the Parent and its Subsidiaries
during such period to acquire by purchase or otherwise the business or
capitalized assets of, or the Stock of, any other Person.
4
"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means that portion of the
obligations under a Capital Lease that is required to be capitalized in
accordance with GAAP.
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 1 year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Rating Group ("S&P") or Xxxxx'x Investors Service, Inc.
("Moody's"), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's, (d) certificates of deposit or
bankers' acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States or any state
thereof having at the date of acquisition thereof combined capital and surplus
of not less than $250,000,000, (e) demand Deposit Accounts maintained with any
bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any individual bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, and (f)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (e) above.
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash
management agreements, in form and substance satisfactory to Agent, each of
which is among Administrative Borrower or one of its Subsidiaries, Collateral
Agent, and one of the Cash Management Banks.
"Cash Management Bank" has the meaning set forth in Section
2.7(a).
"Change of Control" means that (a) any "person" or "group"
(within the meaning of Sections 13(d) and 14(d) of the Exchange Act), other than
Permitted Holders, becomes the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 20%, or more, of the Stock of
Parent having the right to vote for the election of members of the Board of
Directors, or (b) a majority of the members of the Board of Directors do not
constitute Continuing Directors, or (c) any Borrower ceases to own, directly or
indirectly, and control 100% of the outstanding Stock of each of its
Subsidiaries extant as of the Closing Date, or (d) either S. Xxxxxx Xxxxxx or
Xxx Xxxxxx ceases to be involved in the day to day operations and management of
the business of the Loan Parties, and a successor reasonably acceptable to Agent
is not appointed on terms reasonably acceptable to Agent within 120 days of such
cessation of involvement, provided that Agent agrees that Xxxxx X. Xxxxxx shall
be deemed to be an acceptable successor for either of the above officers.
"Closing Date" means the date of the making of the Term Loan
hereunder.
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"Closing Date Business Plan" means the set of Projections of
the Loan Parties for the 2 year period following the Closing Date (on a year by
year basis, and for the 1 year period following the Closing Date, on a month by
month basis), in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent.
"Code" means the New York Uniform Commercial Code, as in
effect from time to time.
"Collateral" means all assets and interests in assets and
proceeds thereof now owned or hereafter acquired by any Loan Party in or upon
which a Lien is granted under any of the Loan Documents.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in any Loan Party's Books, Equipment or, Inventory, in each
case, in form and substance satisfactory to Agent.
"Collateral Agent" means Xxxxx Fargo Foothill, Inc., a
California Corporation, in its capacity as collateral agent for (i) Agent and
the Lenders and (ii) the Revolver Agent and the Revolver Lenders.
"Collateral Agent's Liens" means the Liens granted by Loan
Parties or their Subsidiaries to the Collateral Agent, for the benefit of the
Lender Group and the Revolver Lender Group, under any of the Loan Documents.
"Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds).
"Commitment" means, with respect to each Lender, its
Commitment and, with respect to all Lenders, their Commitments, in each case as
such Dollar amounts are set forth beside such Lender's name under the applicable
heading on Schedule C-1 or in the Assignment and Acceptance pursuant to which
such Lender became a Lender hereunder in accordance with the provisions of
Section 14.1.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C-1 delivered by the chief financial officer of Parent to
Agent.
"Continuing Director" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Parent on the Closing
Date, and (b) any individual who becomes a member of the Board of Directors
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or
comparable managers) of Parent and whose initial assumption of office resulted
from such contest or the settlement thereof.
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"Contribution Agreement" means a contribution agreement
executed and delivered by each Borrower and Guarantor, the form and substance of
which is satisfactory to Agent.
"Control Agreement" means a control agreement, in form and
substance satisfactory to Agent, executed and delivered by any Loan Party,
Collateral Agent, and the applicable securities intermediary (with respect to a
Securities Account) or a bank (with respect to a Deposit Account).
"Copyright Security Agreement" means a copyright security
agreement executed and delivered by each applicable Loan Party and Collateral
Agent, the form and substance of which is satisfactory to Agent.
"Current Interest" has the meaning set forth in Section
2.6(a).
"Daily Balance" means, as of any date of determination and
with respect to any Obligation, the amount of such Obligation owed at the end of
such day.
"Deferred Interest" has the meaning set forth in Section
2.6(a).
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender Rate" means (a) for the first 3 days from
and after the date the relevant payment is due, the Base Rate, and (b)
thereafter, the Base Rate plus the Base Rate Margin.
"Deposit Account" or "DDA" means any deposit account (as that
term is defined in the Code).
"Designated Account" means the Deposit Account of
Administrative Borrower identified on Schedule D-1.
"Designated Account Bank" has the meaning ascribed thereto on
Schedule D-1.
"DEYCO" means Xxxxx X. Xxxxx, Inc., a New York corporation.
"DEYCO Letter of Intent" means the letter agreement dated
August 11, 2003, between JVCO, an entity to be owned by Xxxx Xxxxx, Xxxxx
Xxxxxxx and Xxxx XxXxxxx, and ICI, with respect to a proposed management
agreement between ICI and JVCO pursuant to which, among other things, JVCO would
manage the operations of DEYCO and JVCO would be granted the exclusive right to
purchase certain assets of DEYCO.
"DEYCO Sale" has the meaning ascribed thereto in Section 7.4.
"Dilution" means, for any Business Segment thereof, 3-Month
Dilution or 12-Month Dilution, whichever is greater.
7
"Disbursement Letter" means an instructional letter executed
and delivered by Administrative Borrower to Agent regarding the extensions of
credit to be made on the Closing Date, the form and substance of which is
satisfactory to Agent.
"Dollars" or "$" means United States dollars.
"Due Diligence Certificate" means the due diligence
certificate submitted by Agent to Administrative Borrower, together with the
Borrowers' completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period, Parent's
and its Subsidiaries' consolidated net earnings (or loss), minus extraordinary
gains and interest income, plus interest expense, income taxes, depreciation and
amortization, the prepayment premium in the amount of $125,000 to be paid by
certain Borrowers to Congress Financial Corporation (Western) on the Closing
Date, non-cash charges related to the termination on the Closing Date of the
credit facilities provided by the Existing Lenders to the Loan Parties and
relocation expenses for such period, as determined in accordance with GAAP;
provided, that only relocation expenses incurred prior to the Closing Date shall
be added to consolidated net earnings (or loss) for purposes of this definition.
"Eligible Accounts" has the meaning set forth in the Revolver
Loan Agreement.
"Eligible Equipment" has the meaning set forth in the Revolver
Loan Agreement.
"Eligible Loan Party" has the meaning set forth in the
Revolver Loan Agreement.
"Eligible Real Property Collateral" has the meaning set forth
in Section 3.1(v).
"Eligible Transferee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $250,000,000, (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country and
which has total assets in excess of $250,000,000, provided that such bank is
acting through a branch or agency located in the United States, (c) a finance
company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its business and having (together with its Affiliates) total
assets in excess of $100,000,000, (d) any Affiliate (other than individuals) of
a Lender, (e) so long as no Event of Default has occurred and is continuing, any
other Person approved by Agent and Administrative Borrower (which approval of
Administrative Borrower shall not be unreasonably, withheld, delayed, or
conditioned), and (f) during the continuation of an Event of Default, any other
Person approved by Agent.
"Environmental Actions" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations or alleged
violations of Environmental Laws or releases of Hazardous Materials from (a) any
assets, properties, or businesses of any Loan Party, any Subsidiary of a Loan
Party, or any of their predecessors in interest, (b) from adjoining properties
or businesses, or (c) from or
8
onto any facilities which received Hazardous Materials generated by any Loan
Party, any Subsidiary of a Loan Party, or any of their predecessors in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
permit, binding and enforceable guideline, binding and enforceable written
policy or rule of common law now or hereafter in effect and in each case as
amended, or any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment, to the extent
binding on any Loan Party or any Subsidiary of a Loan Party, relating to the
environment, human health, employee health and safety, or Hazardous Materials,
including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC Section
1251 et seq; the Toxic Substances Control Act, 15 USC Section 2601 et seq; the
Clean Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water Act, 42 USC
Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC Section 2701 et
seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC
Section 11001 et seq.; the Hazardous Material Transportation Act, 49 USC Section
1801 et seq.; and the Occupational Safety and Health Act, 29 USC Section 651 et
seq. (to the extent it regulates occupational exposure to Hazardous Materials);
the Canadian Environmental Protection Act (Canada); the Fisheries Act (Canada);
the Transportation of Dangerous Goods Act (Canada); the Environmental Protection
Act (Ontario); the Water Resource Act (Ontario); the Waste Management Act
(British Columbia); the Environmental Quality Act (Quebec); and any federal,
state, provincial and local or foreign counterparts or equivalents, in each case
as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Equipment" means equipment (as that term is defined in the
Code), and includes machinery, machine tools, motors, furniture, furnishings,
fixtures, vehicles (including motor vehicles), computer hardware, tools, parts,
and goods (other than consumer goods, farm products, or Inventory), wherever
located, including all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Loan Party or a Subsidiary of a Loan Party under IRC Section 414(b), (b) any
trade or business subject to ERISA whose employees are treated as employed by
the same employer as the employees of a Loan Party or a Subsidiary of a Loan
Party under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA
and Section 412 of the IRC, any organization subject to ERISA that is a member
of an
9
affiliated service group of which a Loan Party or a Subsidiary of a Loan Party
is a member under IRC Section 414(m), or (d) solely for purposes of Section 302
of ERISA and Section 412 of the IRC, any Person subject to ERISA that is a party
to an arrangement with a Loan Party or a Subsidiary of a Loan Party and whose
employees are aggregated with the employees of a Loan Party or a Subsidiary of a
Loan Party under IRC Section 414(o).
"ERISA Event" means (a) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan, (b) the withdrawal of a Loan Party, any of
its Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in
which it was a "substantial employer" (as defined in Section 4001(a)(2) of
ERISA), (c) the providing of notice of intent to terminate a Benefit Plan in a
distress termination (as described in Section 4041(c) of ERISA), (d) the
institution by the PBGC of proceedings to terminate a Benefit Plan or
Multiemployer Plan, (e) any event or condition (i) that provides a basis under
Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan or Multiemployer Plan,
or (ii) that may result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA, (f) the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of a Loan Party, any of its
Subsidiaries or ERISA Affiliates from a Multiemployer Plan, (g) providing any
security to any Plan under Section 401(a)(29) of the IRC by a Loan Party or its
Subsidiaries or any of their ERISA Affiliates or (h) any equivalent event,
action, condition, proceeding or otherwise under Canadian Employee Benefit Laws.
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" has the meaning set forth in the
Revolver Loan Agreement.
"Excess Cash Flow" means, for any fiscal period of Parent,
without duplication, (i) Parent's and its Subsidiaries' consolidated net
earnings (or loss), minus extraordinary gains and interest income, for such
period, plus (ii) all non-cash charges of Parent and its Subsidiaries deducted
in arriving at such consolidated net earnings (or loss) for such period, less
(iii) all non-cash credits of Parent and its Subsidiaries included in arriving
at such consolidated net earnings (or loss) for such period, less (iv) all
scheduled and mandatory cash principal payments on the Term Loan made during
such period, and all scheduled cash principal payments on other Indebtedness of
Parent or any of its Subsidiaries during such period to the extent such other
Indebtedness is permitted to be incurred, and such payments are permitted to be
made, under this Agreement, less (v) the cash portion of Capital Expenditures
made by Parent and its Subsidiaries during such period to the extent permitted
to be made under this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
in effect from time to time.
"Existing Lenders" means Bank of America, N.A. and Congress
Financial Corporation (Western).
"Expense Deposit" has the meaning set forth in Section 6.19.
"Extraordinary Receipts" means any Collections received by the
Parent or any of its Subsidiaries not in the ordinary course of business (and
not consisting of proceeds described in Section 2.4(c)(v), (c)(vi) or (c)(viii)
hereof), including, (i) foreign, United States, state or local
10
tax refunds (other than the Specified Tax Refund), (ii) pension plan reversions,
(iii) proceeds of insurance (including proceeds of the key man life insurance
policies), but excluding insurance with respect to Inventory, (iv) judgments,
proceeds of settlements or other consideration of any kind in connection with
any cause of action, (v) condemnation awards (and payments in lieu thereof), but
excluding condemnation awards with respect to Inventory, (vi) indemnity
payments, and (vii) any purchase price adjustment received in connection with
any purchase agreement.
"Family Member" means, with respect to any individual, any
other individual having a relationship by blood (to the second degree of
consanguinity), marriage, or adoption to such individual.
"Family Trusts" means, with respect to any individual, trusts
or other estate planning vehicles established for the benefit of such individual
or Family Members of such individual and in respect of which such individual
serves as trustee or in a similar capacity.
"Fee Letter" means that certain fee letter, dated as of even
date herewith, between Borrowers and Agent, in form and substance satisfactory
to Agent.
"FEIN" means Federal Employer Identification Number.
"Fiscal Year" means (i) in the case of the Parent and its
Subsidiaries other than IPD, Huck NC and Xxxx Xxxxxx, a fiscal year ending on
January 31st of each calendar year, and (ii) in the case of IPD, Huck NC and
Xxxx Xxxxxx, a fiscal year ending on the Friday closest to January 31 of each
calendar year.
"Fixed Charges" means with respect to Parent and its
Subsidiaries for any period, the sum, without duplication, of (a) Interest
Expense, (b) principal payments required to be paid during such period in
respect of Indebtedness, and (c) payments made pursuant to a lease and
distribution agreement dated April 29, 2002 between the Loan Parties and
Worldwide Media Services, Inc..
"Fixed Charge Coverage Ratio" means, with respect to Parent
and its Subsidiaries for any period, the ratio of (i) EBITDA for such period
minus Capital Expenditures made (to the extent not already incurred in a prior
period) or incurred during such period, and all federal, state and local income
taxes accrued for such period to (ii) Fixed Charges for such period.
"Florida Headquarters" means the Loan Parties' Bonita Springs,
Florida corporate headquarters.
"Flow of Funds Agreement" means an agreement among the Loan
Parties, Collateral Agent and the Agent with respect to the fundings to be made
on the Closing Date.
"Fulfillment Business Segments" means the Fulfillment/WMS
Business Segment, Fulfillment/DEYCO Business Segment, Fulfillment/ANS Business
Segment and Fulfillment/IPD Business Segment.
"Fulfillment/ANS Business Segment" means the business and
operations of the Loan Parties related to the distribution of magazines,
confections and general merchandise to the
11
retail and wholesale market conducted under the trade name "Austin News Service"
on the Closing Date by the Subsidiaries of Parent named in Part I-A of Schedule
S-1.
"Fulfillment/DEYCO Business Segment" means the business and
operations of the Loan Parties related to the distribution of magazines,
confections and general merchandise to the retail and wholesale market conducted
on the Closing Date by the Subsidiaries of Parent named in Part I-B of Schedule
S-1.
"Fulfillment/IPD Business Segment" means the business and
operations of the Loan Parties related to the distribution of magazines,
confections and general merchandise to the retail and wholesale market conducted
on the Closing Date by the Subsidiaries of Parent named in Part I-C of Schedule
S-1.
"Fulfillment/WMS Business Segment" means the business and
operations of the Loan Parties related to the export of United States magazine
titles for distribution outside of the United States including that conducted on
the Closing Date by Source Interlink International, Inc., or under the trade
name "Worldwide Media Service" by the Subsidiaries of Parent named in Part I-D
of Schedule S-1.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"General Intangibles" means general intangibles (as that term
is defined in the Code), including payment intangibles, contract rights, rights
to payment, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trade secrets, trademarks,
servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists,
monies due or recoverable from pension funds, route lists, rights to payment and
other rights under any royalty or licensing agreements, infringement claims,
computer programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims, and any and all supporting obligations in respect thereof, and
any other personal property other than Accounts, Deposit Accounts, goods,
Investment Property, and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal (including the
federal government of Canada), state, provincial, local, or other governmental
or administrative body, instrumentality, department, or agency or any court,
tribunal, administrative hearing body, arbitration panel, commission, or other
similar dispute-resolving panel or body.
"Guarantor" means each Subsidiary of Parent named in Schedule
G-1 and each other Person that guarantees, pursuant to Section 6.15 or
otherwise, all or any part of the Obligations.
"Guaranty" means the Guaranty set forth in Section 18, the
Canadian Guaranty and any other guaranty executed and delivered by a Guarantor
in favor of Agent, for the benefit of the Lender Group, in form and substance
satisfactory to Agent.
12
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified or regulated pursuant to, any Environmental
Law as "hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify or
regulate substances by reason of harmful effects to human health or the
environment deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, reproductive toxicity, or "EP toxicity", (b) oil,
petroleum, or petroleum derived substances, natural gas, natural gas liquids,
synthetic gas, drilling fluids, produced waters, and other wastes associated
with the exploration, development, or production of crude oil, natural gas, or
geothermal resources, (c) any flammable substances or explosives or any
radioactive materials, (d) asbestos in any form or electrical equipment that
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of 50 parts per million and (e) any other substance, the
storage, manufacture, disposal, treatment, generation, use, transportation,
remediation, release into or concentration in the environment of which is
prohibited, controlled, regulated or licensed by any Governmental Authority
under any Environmental Law.
"Hedge Agreement" means any and all agreements, or documents
now existing or hereafter entered into by Administrative Borrower or its
Subsidiaries that provide for an interest rate, credit, commodity or equity
swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
cross currency rate swap, currency option, or any combination of, or option with
respect to, these or similar transactions, for the purpose of hedging
Administrative Borrower's or its Subsidiaries' exposure to fluctuations in
interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.
"Hilco" means Hilco Capital LP, a Delaware limited
partnership.
"Holdout Lender" has the meaning set forth in Section 15.2.
"Huck NC" means Huck Store Fixture Company of North Carolina,
a North Carolina corporation.
"Xxxx Xxxxxx" means Source-Huck Store Fixture Company, a
Delaware corporation.
"ICI" means The Interlink Companies, Inc., a Delaware
corporation.
"Indebtedness" means (a) all obligations for borrowed money,
(b) all obligations evidenced by bonds, debentures, notes, or other similar
instruments and all reimbursement or other obligations in respect of letters of
credit, bankers acceptances, interest rate swaps, or other financial products,
(c) all obligations as a lessee under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of a Person or its
Subsidiaries, irrespective of whether such obligation or liability is assumed,
(e) all obligations to pay the deferred purchase price of assets (other than
trade payables incurred in the ordinary course of business and repayable in
accordance with customary trade practices), (f) all obligations owing under
Hedge Agreements, and (g) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person that constitutes
Indebtedness under any of clauses (a) through (f) above.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
13
"Indemnified Person" has the meaning set forth in Section
11.3.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of any applicable Bankruptcy Code or
under any other state, provincial or federal bankruptcy or insolvency law,
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extensions generally with creditors, or proceedings seeking
reorganization, arrangement, or other similar relief.
"In-Store Services Business Segments" means, collectively, the
In-Store Services/Wire Business Segment, the In-Store Services/Claiming Business
Segment and the In-Store Services/Other Business Segment.
"In-Store Services/Claiming Business Segment" means the
business and operations of the Loan Parties related to collecting rebates and
other payments on behalf of Loan Parties and retailers and related services
conducted on the Closing Date by the Subsidiaries of Parent named in Part II-B
of Schedule S-1.
"In-Store Services/Other Business Segment" means the business
and operations of the Loan Parties related to providing retail sales information
and other services to retailers conducted on the Closing Date by the
Subsidiaries of Parent named in Part II-C of Schedule S-1.
"In-Store Services/Wire Business Segment" means the business
and operations of the Loan Parties related to manufacturing wire racks for
retailers and related services conducted on the Closing Date by the Subsidiaries
of Parent named in Part II-A of Schedule S-1.
"Intangible Assets" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be treated
as intangibles under GAAP.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Loan Parties and each of their Subsidiaries
and Agent, the form and substance of which is satisfactory to Agent.
"Intercreditor and Collateral Agency Agreement" means the
Intercreditor and Collateral Agency Agreement dated as of October 30, 2003, by
and among Agent, the Revolver Agent and the Collateral Agent.
"Interest Expense" means, for any period, the aggregate of the
interest expense of Parent and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Inventory" means inventory (as that term is defined in the
Code).
"Investment" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), purchases or other
acquisitions of Indebtedness, Stock, or all or substantially all of the assets
of such other Person (or of any
14
division or business line of such other Person), and any other items that are or
would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"Investment Property" means investment property (as that term
is defined in the Code), and any and all supporting obligations in respect
thereof.
"IPD" means International Periodical Distributors, Inc., a
Nevada corporation.
"IRC" means the Internal Revenue Code of 1986, as in effect
from time to time.
"Leased Real Property" means any leasehold interests in real
property now held or hereafter acquired by a Loan Party and the improvements
thereto.
"Lender" and "Lenders" have the respective meanings set forth
in the preamble to this Agreement, and shall include any other Person made a
party to this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of
the Lenders and Agent.
"Lender Group Expenses" means all (a) costs or expenses
(including taxes, and insurance premiums) required to be paid by a Loan Party or
its Subsidiaries under any of the Loan Documents that are paid, advanced, or
incurred by the Lender Group, (b) fees or charges paid or incurred by Agent in
connection with the Lender Group's transactions with the Loan Parties or their
Subsidiaries, including, fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, litigation, and UCC and PPSA searches and including searches with the
patent and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisal (including periodic
collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
real estate surveys, real estate title policies and endorsements, and
environmental audits, (c) costs and expenses incurred by Agent in the
disbursement of funds to or for the account of Borrowers or other members of the
Lender Group (by wire transfer or otherwise), (d) charges paid or incurred by
Agent resulting from the dishonor of checks, (e) reasonable costs and expenses
paid or incurred by the Lender Group to correct any default or enforce any
provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (f) audit fees and expenses of Agent related to
audit examinations of the Books to the extent of the fees and charges (and up to
the amount of any limitation) contained in this Agreement, (g) reasonable costs
and expenses of third party claims or any other suit paid or incurred by the
Lender Group in enforcing or defending the Loan Documents or in connection with
the transactions contemplated by the Loan Documents or the Lender Group's
relationship with any Loan Party or any Subsidiary of a Loan Party, (h) Agent's
and each Lender's reasonable costs and expenses (including attorneys fees)
incurred in advising, structuring, drafting, reviewing, administering,
syndicating, or amending the Loan Documents, and (i) Agent's and each Lender's
reasonable costs and expenses (including attorneys, accountants, consultants,
and other advisors fees and expenses) incurred in terminating, enforcing
(including
15
attorneys, accountants, consultants, and other advisors fees and expenses
incurred in connection with a "workout," a "restructuring," or an Insolvency
Proceeding concerning any Loan Party or any Subsidiary of a Loan Party or in
exercising rights or remedies under the Loan Documents), or defending the Loan
Documents, irrespective of whether suit is brought, or in taking any Remedial
Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender,
such Lender, together with such Lender's Affiliates, officers, directors,
employees, attorneys, and agents.
"Lien" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset,
irrespective of whether (a) such interest is based on the common law, statute,
or contract, (b) such interest is recorded or perfected, and (c) such interest
is contingent upon the occurrence of some future event or events or the
existence of some future circumstance or circumstances. Without limiting the
generality of the foregoing, the term "Lien" includes the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also includes reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Security Agreement,
the Intercreditor and Collateral Agency Agreement, the Cash Management
Agreements, the Control Agreements, the Copyright Security Agreement, the Flow
of Funds Agreement, the Due Diligence Certificate, the Fee Letter, each
Guaranty, the Validity and Support Guaranty, the Canadian Documents, the
Contribution Agreement, the Intercompany Subordination Agreement, the Mortgages,
the Patent Security Agreement, the Pledge Agreement, the Trademark Security
Agreement, the Promissory Notes and any other note or notes executed by a
Borrower in connection with this Agreement and payable to a member of the Lender
Group, the Warrant, the Warrantholders Rights Agreement, the Warrant Valuation
Letter, and any other agreement entered into, now or in the future, by a Loan
Party and the Lender Group in connection with this Agreement.
"Loan Party" means any Borrower and any Guarantor.
"Material Adverse Change" means (a) a material adverse change
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of an Eligible Loan Party, or
of the Loan Parties and their Subsidiaries, taken as a whole, (b) a material
impairment of the ability of the Loan Parties, taken as a whole, to perform
their obligations under the Loan Documents or of the Lender Group's ability to
enforce the Obligations or realize upon the Collateral, or (c) a material
impairment of the enforceability or priority of the Collateral Agent's Liens
with respect to the Collateral as a result of an action or failure to act on the
part of a Loan Party or a Subsidiary of a Loan Party.
16
"Material Contracts" means any agreement or contract of any
Loan Party which has the term of one year or longer and (a) involves
consideration to such Loan Party of $500,000 or more in any year, (b) involves
consideration by such Loan Party of $500,000 or more in any year, (c) imposes
financial obligations on any Loan Party of $500,000 or more in any year (other
than any agreement that by its terms may be terminated by any Loan Party or any
Subsidiary in less than one year), or (d) is otherwise material (or together
with related agreements and contracts, is material) to the business, operations,
financial condition, performance or properties of an Eligible Loan Party, or the
Loan Parties, taken as a whole, excluding, however, customer purchase orders or
purchase orders to any vendor, in each case entered into in the ordinary course
of a Loan Party's business.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Loan Agreement Amount" means $50,000,000.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a
Loan Party or a Subsidiary of a Loan Party in favor of Collateral Agent, for the
benefit of the Lender Group and the Revolver Lender Group, in form and substance
satisfactory to Agent, that encumber the Real Property Collateral and the
related improvements thereto.
"Multiemployer Plan" means a "multiemployer plan" (as defined
in Section 4001(a)(3) of ERISA) or such equivalent plan under Canadian Employee
Benefit Laws to which a Loan Party, any of its Subsidiaries, or any ERISA
Affiliate has contributed, or was obligated to contribute, within the past six
years.
"Myco IRB" means the Industrial Project Revenue Bonds, Series
1995 (Myco, Inc. Project), issued pursuant to the Indenture of Trust dated as of
January 1, 0000, xxxxxxx xxx Xxxx xx Xxxxxxxx, Xxxxxxxx and Amalgamated Bank of
Chicago, as trustee and tender agent.
"Negotiable Collateral" means letters of credit, letter of
credit rights, instruments, promissory notes, drafts, documents, and chattel
paper (including electronic chattel paper and tangible chattel paper), and any
and all supporting obligations in respect thereof.
"Net Liquidation Percentage" means the percentage of the
Appraised Value of Loan Parties' Equipment that is estimated to be recoverable
in a forced liquidation of such Equipment, such percentage to be as determined
from time to time by a qualified appraisal company selected by Agent.
"Obligations" means all loans (including the Term Loan),
debts, principal, interest (including any interest that, but for the
commencement of an Insolvency Proceeding, would have accrued), premiums,
liabilities (including all amounts charged to Borrowers' Loan Account pursuant
hereto), obligations (including indemnification obligations), fees (including
the fees provided for in the Fee Letter), charges, costs, Lender Group Expenses
(including any fees or expenses that, but for the commencement of an Insolvency
Proceeding, would have accrued), lease payments, guaranties, covenants, and
duties of any kind and description owing by Loan Parties to the Lender Group
pursuant to or evidenced by the Loan Documents and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due or
to
17
become due, now existing or hereafter arising, and including all interest not
paid when due and all Lender Group Expenses that Loan Parties are required to
pay or reimburse by the Loan Documents, by law, or otherwise. Any reference in
this Agreement or in the Loan Documents to the Obligations shall include all
extensions, modifications, renewals, or alterations thereof, both prior and
subsequent to any Insolvency Proceeding.
"Originating Lender" has the meaning set forth in Section
14.1(e).
"Owned Real Property" means any fee interests in Real Property
now owned or hereafter acquired by any Loan Party and the improvements thereto.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Participant" has the meaning set forth in Section 14.1(e).
"Patent Security Agreement" means a patent security agreement
executed and delivered by each applicable Loan Party and Collateral Agent, the
form and substance of which is satisfactory to Agent.
"Pay-Off Letter" means a letter, in form and substance
satisfactory to Agent, from each Existing Lender to Agent respecting the amount
necessary to repay in full all of the obligations of the Loan Parties and their
Subsidiaries owing to such Existing Lender and obtain a release of all of the
Liens existing in favor of such Existing Lender in and to the assets of the Loan
Parties and their Subsidiaries.
"PBGC" means the Pension Benefit Guaranty Corporation as
defined in Title IV of ERISA, or any successor thereto or equivalent entity
under Canadian Employee Benefit Laws.
"Permitted Acquisition" means any Acquisition by a Loan Party
to the extent that each of the following conditions shall have been satisfied:
(a) (i) Excess Availability is at least
$15,000,000 both (A) for the 30 consecutive day period
immediately prior to the date of such Acquisition and (B)
immediately after giving effect to such Acquisition, (ii) no
Default or Event of Default shall have occurred and be
continuing immediately prior to such Acquisition or
immediately after giving effect thereto, and (iii) the
aggregate consideration payable by the Loan Parties in
connection with such Acquisition shall not exceed $1,000,000;
(b) (i) neither the Borrower nor any of its
Subsidiaries shall, in connection with such Acquisition,
assume or remain liable in respect of any Indebtedness of the
Seller or Sellers, or other obligation (including contingent
obligations) of the Seller or Sellers (except for obligations
incurred in the ordinary course of business in operating the
property so acquired and necessary and desirable to the
continued operation of such property and except for
Indebtedness that the Required Lenders otherwise expressly
consents to in writing after their review of the terms of the
proposed Acquisition), and (ii) all property to be so acquired
in connection with such Acquisition shall be free and clear of
any and all
18
Liens, except for Permitted Liens (and if any such property is
subject to any Lien not permitted by this clause (ii) then
concurrently with such Acquisition such Lien shall be
released);
(c) any Subsidiary to be acquired or formed as a
result of such Acquisition shall be a Borrower or a Guarantor
(as determined by the Agent) and shall be engaged in the same
business as the other Loan Parties and such Subsidiary will be
a direct wholly-owned Subsidiary of one of the other Loan
Parties;
(d) such Acquisition shall be effected in such a
manner so that the acquired Stock or assets are owned by a
Borrower or a Guarantor (as determined by the Agent) and, if
effected by merger or consolidation involving a Borrower or a
Guarantor, a Borrower or Guarantor shall be the continuing or
surviving Person; and
(e) any such Subsidiary shall execute and
deliver the agreements, instruments and other documents
required by Section 6.15.
"Permitted Discretion" means a determination made in good
faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions
of Equipment that is substantially worn, damaged, or obsolete in the ordinary
course of business, (b) sales of Inventory to buyers in the ordinary course of
business, (c) the use or transfer of money or Cash Equivalents in a manner that
is not prohibited by the terms of this Agreement or the other Loan Documents,
(d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights,
and other intellectual property rights in the ordinary course of business, (e)
sales or other dispositions of any assets by a Borrower to any other Borrower or
by a Guarantor to any other Loan Party, and (f) the sale of the residential real
property owned by the Loan Parties located at 0000 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxx.
"Permitted Holder" means (a) Xxxxxxxx Xxxxxxx, his Family
Members, and his Family Trusts, and (b) Fidelity Management.
"Permitted Investments" means (a) Investments in cash and Cash
Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, and (d) Investments received in settlement of amounts due to
a Borrower or any Subsidiary of a Borrower effected in the ordinary course of
business or owing to a Borrower or any Subsidiary of a Borrower as a result of
Insolvency Proceedings involving an Account Debtor or upon the foreclosure or
enforcement of any Lien in favor of a Borrower or any Subsidiary of a Borrower.
"Permitted Liens" means (a) Liens held by Collateral Agent,
(b) Liens for unpaid taxes that either (i) are not yet delinquent, or (ii) do
not constitute an Event of Default hereunder and are the subject of Permitted
Protests, (c) Liens set forth on Schedule P-1, (d) the interests of lessors
under operating leases, (e) purchase money Liens or the interests of lessors
under Capital
19
Leases to the extent that such Liens or interests secure Permitted Purchase
Money Indebtedness and so long as such Lien attaches only to the asset purchased
or acquired and the proceeds thereof, (f) Liens arising by operation of law in
favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of Borrowers' business and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet delinquent, or (ii) are the subject of Permitted Protests, (g) Liens
arising from deposits made in connection with obtaining worker's compensation or
other unemployment insurance, (h) Liens or deposits to secure performance of
bids, tenders, or leases incurred in the ordinary course of business and not in
connection with the borrowing of money, (i) Liens granted as security for surety
or appeal bonds in connection with obtaining such bonds in the ordinary course
of business, (j) Liens resulting from any judgment or award that is not an Event
of Default hereunder, and (k) with respect to any Real Property, easements,
rights of way, and zoning restrictions that do not materially interfere with or
impair the use or operation thereof.
"Permitted Protest" means the right of Administrative Borrower
or any of its Subsidiaries to protest any Lien (other than any Lien that secures
the Obligations), taxes (other than payroll taxes or taxes that are the subject
of a United States or Canadian federal or provincial tax lien), or rental
payment, provided that (a) a reserve with respect to such obligation is
established on the Books in such amount as is required under GAAP, (b) any such
protest is instituted promptly and prosecuted diligently by Administrative
Borrower or any of its Subsidiaries, as applicable, in good faith, and (c) Agent
is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Collateral
Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date
of determination, Purchase Money Indebtedness incurred after the Closing Date in
an aggregate amount outstanding at any one time not in excess of $250,000.
"Person" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than
Real Property.
"Plan" means any employee benefit plan, program, or
arrangement maintained or contributed to by a Loan Party or with respect to
which it may incur liability subject to ERISA.
"Pledge Agreement" means a pledge and security agreement, in
form and substance satisfactory to Agent, executed and delivered by each Loan
Party (including the Parent) that owns Stock of a Subsidiary of Parent or that
is the holder of any promissory note, in favor of the Collateral Agent for the
benefit of the Lender Group and the Revolver Lender Group.
"PPSA" means the Personal Property Security Act of the
applicable Canadian province or provinces in respect of the Canadian Guarantors,
as in effect from time to time.
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"Program Contracts" means the standard form agreements used by
the Loan Parties in connection with their (i) Advance Pay, Double Advance Pay,
and Standard RDA Service Programs for collections of retail display allowances
in the In-Store Services Claiming Business Segment and (ii) their Front-End
Merchandiser Programs for sales of display fixtures on a cost sharing basis in
the In-Store Services/Wire Business Segment.
"Projections" means Parent's forecasted (a) balance sheets,
(b) profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Promissory Notes" means the promissory notes in the form of
Exhibit N-1 hereto delivered by the Borrowers to each Lender to evidence the
Term Loan of such Lender pursuant to, and repayable in accordance with the
provision of Section 2.2.
"Pro Rata Share" means, with respect to a Lender, (i) prior to
the making of the Term Loan, the percentage obtained by dividing (y) such
Lender's Commitment, by (z) the aggregate amount of all Lenders' Commitments,
and (ii) from and after the making of the Term Loan, the percentage obtained by
dividing (y) the principal amount of such Lender's portion of the Term Loan by
(z) the principal amount of the Term Loan.
"Purchase Money Indebtedness" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"Qualified Cash" means, as of any date of determination, the
amount of unrestricted cash and Cash Equivalents of Borrowers and their
Subsidiaries that is paid to Revolver Agent by wire transfer in immediately
available funds on or prior to the Closing Date for deposit into the Revolver
Agent's Account under the Revolver Loan Agreement.
"Real Property" means any estates or interests in real
property now owned or hereafter acquired by any Loan Party or a Subsidiary of
any Loan Party and the improvements thereto.
"Real Property Collateral" means the parcel or parcels of Real
Property identified on Schedule R-1 and any Real Property hereafter acquired by
a Loan Party or any Subsidiary of a Loan Party.
"Record" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all costs and actions taken to (a)
clean up, remove, remediate, contain, treat, monitor, assess, evaluate,
investigate or in any way address Hazardous Materials in the indoor or outdoor
environment, (b) prevent or minimize a release or threatened release of
Hazardous Materials so they do not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment, (c) perform any
pre-remedial studies,
21
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"Rent Reserve" means a reserve established by Agent or
Revolver Agent for each Leased Real Property location set forth in Schedule L-1,
provided that the reserve established for any such location shall be reduced to
zero on the date that Collateral Agent shall receive a Collateral Access
Agreement for such location.
"Replacement Lender" has the meaning set forth in Section
15.2(a).
"Report" has the meaning set forth in Section 16.17.
"Reportable Event" means any of the events described in
Section 4043(c) of ERISA or the regulations thereunder other than a Reportable
Event as to which the provision of 30 days' notice to the PBGC is waived under
applicable regulations.
"Required Availability" means that the sum of (a) Excess
Availability (without giving effect to clause (y) of the definition thereof),
plus (b) Qualified Cash, exceeds $7,500,000.
"Required Lenders" means, at any time, Lenders whose aggregate
Pro Rata Shares exceed 50%.
"Revolver Agent" means Xxxxx Fargo Foothill, Inc., in its
capacity as arranger and administrative agent for the Revolver Lenders, and any
successor in such capacity.
"Revolver Event of Default" means an "Event of Default", as
such term is defined in the Revolver Loan Agreement.
"Revolver Lender Group" means the Revolver Lenders and the
Revolver Agent.
"Revolver Lenders" means the lenders from time to time party
to the Revolver Loan Agreement.
"Revolver Loan Agreement" means the Loan Agreement dated as of
October 30, 2003, by and among the Borrowers, the other Loan Parties named
therein, the Revolver Lenders and the Revolver Agent as amended from time to
time in accordance with the Intercreditor and Collateral Agency Agreement.
"Revolver Loan Documents" means the "Loan Documents", as such
term is defined in the Revolver Loan Agreement.
"Revolver Usage" has the meaning set forth in the Revolver
Loan Agreement.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"Securities Account" means a "securities account" as that term
is defined in the Code.
22
"Security Agreement" means a security agreement, in form and
substance satisfactory to Agent, executed and delivered by each Loan Party
(including the Parent), other than a Canadian Guarantor, in favor of Collateral
Agent for the benefit of Lender Group and the Revolver Lender Group.
"Seller" means any Person that sells Stock or other property
or assets to a Loan Party or a Subsidiary of a Loan Party in a Permitted
Acquisition.
"Senior Debt" means, at any date, the sum of (x) the Revolver
Usage at such date, plus (y) the aggregate outstanding principal amount of the
Term Loan A under the Revolver Loan Agreement at such date, plus (z) the
aggregate outstanding principal amount of the Term Loan at such date.
"Senior Debt Ratio" means, at any date, the ratio of (i)
Senior Debt at such date, to (ii) EBITDA for the trailing four fiscal quarters
most recently ended on or prior to such date.
"Settlement" has the meaning set forth in Section 2.3(b).
"Solvent" means, with respect to any Person on a particular
date, that, at fair valuations, the sum of such Person's assets is greater than
all of such Person's debts and, in the case of the Canadian Guarantors, means
that such Canadian Guarantor is not an "insolvent person" (as such term is
defined in the Bankruptcy and Insolvency Act (Canada)).
"Specified Tax Refunds" means the tax refunds expected to be
received by the Loan Parties from the taxing authorities for the Fiscal Year and
in the approximate amounts, in each case set forth on Schedule S-2.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Subordinated Indebtedness" means unsecured Indebtedness of
any Loan Party which has been expressly subordinated in right of payment to all
Indebtedness of such Loan Party under the Loan Documents by the execution and
delivery of a subordination agreement, in form and substance satisfactory to the
Required Lenders, which Indebtedness is on terms and conditions (including,
without limitation, payment terms, interest rates, covenants, defaults and other
material terms) satisfactory to Required Lenders.
"Subsidiary" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
"Taxes" has the meaning set forth in Section 16.11.
23
"Term Loan" has the meaning set forth in Section 2.2.
"Term Loan A" means the "Term Loan" as defined in the Revolver
Loan Agreement.
"Term Loan Amount" means $15,000,000.
"Termination Event" means (i) a Reportable Event with respect
to any Benefit Plan, (ii) any event that causes any Loan Party or any of its
ERISA Affiliates to incur liability under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of
the IRC, (iii) the filing of a notice of intent to terminate a Benefit Plan or
the treatment of a Benefit Plan amendment as a termination under Section 4041 of
ERISA, (iv) the institution of proceedings by the PBGC to terminate a Benefit
Plan, (v) any other event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan, or (vi) any equivalent event, action, condition,
proceeding or otherwise under Canadian Employee Benefit Laws.
"Trademark Security Agreement" means a trademark security
agreement executed and delivered by each applicable Loan Party and Collateral
Agent, the form and substance of which is satisfactory to Agent.
"UCC Filing Authorization Letter" means a letter duly executed
by each Loan Party authorizing Collateral Agent to file appropriate financing
statements on Form UCC-1 without the signature of such Loan Party, in such
office or offices as may be necessary or, in the opinion of Agent, desirable to
perfect the security interests purported to be created by the Loan Documents.
"United States" means the United States of America.
"US Marketing Services" means Source-U.S. Marketing Services,
Inc., a Delaware corporation.
"Validity and Support Agreement" means, collectively, the
Validity and Support Agreements made by each of S. Xxxxxx Xxxxxx, Xxxxx X.
Xxxxx, Xxxx Xxxx and Xxxx Xxxxxxx, in each case in favor of Agent, the form and
substance of which is satisfactory to Agent.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Warrant" means the Common Stock Purchase Warrant made by
Parent in favor of Agent, the form and substance of which is satisfactory to
Agent.
"Warrant Valuation Letter" means the side letter from the
Parent to Agent with respect to the value to be attributed to the Warrant.
"Warrantholders Rights Agreement" means the Warrantholders
Rights Agreement dated as of the date hereof by and between Parent and Agent,
the form of which is satisfactory to Agent.
24
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a
national banking association.
"Wood Manufacturing Accounts" means Accounts arising from
goods sold and services rendered by the Wood Manufacturing Business Segments of
the Loan Parties.
"Wood Manufacturing Business Segments" means the Wood
Manufacturing/Quincy Business Segment and the Wood Manufacturing/NC Business
Segment.
"Wood Manufacturing/NC Business Segment" means the business
and operations of the Loan Parties related to designing and manufacturing custom
wood and wire displays for periodicals conducted on the Closing Date by the
Subsidiaries of Parent named in Part III-A of Schedule S-1.
"Wood Manufacturing/Quincy Business Segment" means the
business and operations of the Loan Parties related to designing and
manufacturing custom wood and wire displays for periodicals conducted on the
Closing Date by the Subsidiaries of Parent named in Part III-B of Schedule S-1.
"Zoning Letter" has the meaning set forth in Section 3.2 (e).
"3-Month Dilution" means, for each Business Segment, as of any
date of determination, a percentage, based upon the experience of the
three-month period ending as of the last day of the immediately preceding fiscal
month which is the result of dividing the Dollar amount of (a) bad debt
write-downs, discounts, advertising allowances, credits, profit sharing
deductions or other dilutive items with respect to Loan Parties' Accounts for
such Business Segment during such period, by (b) Loan Parties' xxxxxxxx with
respect to Accounts for such Business Segment during such period.
"12-Month Dilution" means, for each Business Segment thereof
(as applicable), as of any date of determination, a percentage, based upon the
experience of the twelve-month period ending as of the last day of the
immediately preceding fiscal month which is the result of dividing the Dollar
amount of (a) bad debt write-downs, discounts, advertising allowances, credits,
profit sharing deductions or other dilutive items with respect to Loan Parties'
Accounts for such Business Segment during such period, by (b) Loan Parties'
xxxxxxxx with respect to Accounts for such Business Segment during such period.
1.2. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. When used herein, the
term "financial statements" shall include the notes and schedules thereto.
Whenever the term "Borrowers" or the term "Parent" is used in respect of a
financial covenant or a related definition, it shall be understood to mean
Parent and its Subsidiaries on a consolidated basis unless the context clearly
requires otherwise.
1.3. CODE. Any terms used in this Agreement that are defined
in the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein.
25
1.4. CONSTRUCTION. Unless the context of this Agreement or any
other Loan Document clearly requires otherwise, references to the plural include
the singular, references to the singular include the plural, the term
"including" is not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to the
repayment in full of the Obligations shall mean the repayment in full in cash of
all Obligations other than contingent indemnification Obligations. Any reference
herein to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in the other Loan
Documents shall be satisfied by the transmission of a Record and any Record
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.
1.5. SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1. [Intentionally Omitted].
2.2. TERM LOAN. Subject to the terms and conditions of this
Agreement, on the Closing Date each Lender with a Term Loan Commitment agrees
(severally, not jointly or jointly and severally) to make term loans
(collectively, the "Term Loan") to Borrowers in an amount equal to such Lender's
Pro Rata Share of the Term Loan Amount. The outstanding unpaid principal balance
and all accrued and unpaid interest under the Term Loan shall be due and payable
on the date of termination of this Agreement, whether by its terms, by
prepayment, or by acceleration. All amounts outstanding under the Term Loan
shall constitute Obligations. Borrowers may, at any time, prepay all or a
portion of the Term Loan, without penalty or premium. Each prepayment shall be
applied against the remaining installments of principal due on the Term Loan in
the inverse order of maturity.
2.3. BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. The Term Loan shall be
made by an irrevocable written request by an Authorized Person delivered to
Agent (which notice must be received by Agent no later than 12:00 p.m. (Illinois
time) on the Closing Date.
(b) SETTLEMENT. It is agreed that each Lender's
funded portion of the Term Loan is intended by the Lenders to equal, at all
times, such Lender's Pro Rata Share of the
26
outstanding Term Loan. Such agreement notwithstanding, Agent and the other
Lenders agree (which agreement shall not be for the benefit of or enforceable by
Borrowers) that in order to facilitate the administration of this Agreement and
the other Loan Documents, settlement among them as to the Term Loan
("Settlement") shall take place on a periodic basis as determined by Agent.
(c) NOTATION. Agent shall record on its books the
principal amount of the Term Loan owing to each Lender and the interests therein
of each Lender, from time to time and such records shall, absent manifest error,
conclusively be presumed to be correct and accurate. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of each payment
or prepayment of principal of such Lender's Term Loan in its books and records,
including computer records.
(d) LENDERS' FAILURE TO PERFORM. The Term Loan shall
be made by the Lenders contemporaneously and in accordance with their Pro Rata
Shares. It is understood that (i) no Lender shall be responsible for any failure
by any other Lender to perform its obligation to make the Term Loan hereunder,
nor shall any Commitment of any Lender be increased or decreased as a result of
any failure by any other Lender to perform its obligations hereunder, and (ii)
no failure by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
2.4. PAYMENTS.
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided
herein, all payments by Borrowers shall be made to Agent's Account for
the account of the Lender Group and shall be made in immediately
available funds, no later than 1:00 p.m. (Illinois time) on the date
specified herein. Any payment received by Agent later than 1:00 p.m.
(Illinois time), shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue to
accrue until such following Business Day.
(ii) Unless Agent receives notice from
Administrative Borrower prior to the date on which any payment is due
to the Lenders that Borrowers will not make such payment in full as and
when required, Agent may assume that Borrowers have made (or will make)
such payment in full to Agent on such date in immediately available
funds and Agent may (but shall not be so required), in reliance upon
such assumption, distribute to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent
Borrowers do not make such payment in full to Agent on the date when
due, each Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at the
Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) APPORTIONMENT AND APPLICATION.
(i) Except as otherwise provided in the Loan
Documents (including letter agreements between Agent and individual
Lenders), aggregate principal and interest payments shall be
apportioned ratably among the Lenders (according to the
27
unpaid principal balance of the Obligations to which such payments
relate held by each Lender) and payments of fees and expenses (other
than fees or expenses that are for Agent's separate account, after
giving effect to any letter agreements between Agent and individual
Lenders) shall be apportioned ratably among the Lenders having a Pro
Rata Share of the type of Commitment or Obligation to which a
particular fee relates. Except as otherwise specifically provided in
Section 2.4(c), all payments shall be remitted to Agent and all such
payments, and all proceeds of Collateral received by Agent, shall be
applied as follows:
(A) first, to pay any Lender Group Expenses
then due to Agent under the Loan Documents, until paid in
full,
(B) second, to pay any Lender Group Expenses
then due to the Lenders under the Loan Documents, on a ratable
basis, until paid in full,
(C) third, to pay any fees then due to Agent
(for its separate accounts, after giving effect to any letter
agreements between Agent and the individual Lenders) under the
Loan Documents until paid in full,
(D) fourth, to pay any fees then due to any
or all of the Lenders (after giving effect to any letter
agreements between Agent and individual Lenders) under the
Loan Documents, on a ratable basis, until paid in full,
(E) fifth, to pay interest due in respect of
the Term Loan, until paid in full,
(F) sixth, ratably to pay all principal
amounts then due and payable (other than as a result of an
acceleration thereof) with respect to the Term Loan until paid
in full,
(G) seventh, to pay the outstanding
principal balance of the Term Loan (in the inverse order of
the maturity of the installments due thereunder) until the
Term Loan is paid in full,
(H) eighth, pay any other Obligations until
paid in full, and
(I) ninth, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto
under applicable law.
(ii) Agent promptly shall distribute to each
Lender, pursuant to the applicable wire instructions received from each
Lender in writing, such funds as it may be entitled to receive, subject
to a Settlement delay as provided in Section 2.3(f).
(iii) In each instance, so long as no Event of
Default has occurred and is continuing, this Section 2.4(b) shall not
be deemed to apply to any payment by Borrowers specified by Borrowers
to be for the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.
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(iv) For purposes of the foregoing, "paid in
full" means payment of all amounts owing under the Loan Documents
according to the terms thereof, including loan fees, service fees,
professional fees, interest (and specifically including interest
accrued after the commencement of any Insolvency Proceeding), default
interest, interest on interest, and expense reimbursements, whether or
not any of the foregoing would be or is allowed or disallowed in whole
or in part in any Insolvency Proceeding.
(v) In the event of a direct conflict between
the priority provisions of this Section 2.4 and other provisions
contained in any other Loan Document, it is the intention of the
parties hereto that such priority provisions in such documents shall be
read together and construed, to the fullest extent possible, to be in
concert with each other. In the event of any actual, irreconcilable
conflict that cannot be resolved as aforesaid, the terms and provisions
of this Section 2.4 shall control and govern.
(c) MANDATORY PREPAYMENTS.
(i) Immediately upon any sale or disposition by
any Loan Party or its Subsidiaries of property or assets (other than
(x) a Permitted Disposition described in clause (b), (c), (d) or (e) of
the definition of such term or (y) the DEYCO Sale) or the receipt by
any Loan Party of the proceeds of any insurance policy with respect to
Inventory or condemnation awards with respect to Inventory, Borrowers
shall prepay the outstanding principal amount of the Term Loan to the
extent provided in Section 2.4(d) with all Net Cash Proceeds or the
insurance or condemnation proceeds received by such Person in
connection with such sales or dispositions or such casualty or
condemnation event to the extent that the aggregate amount of Net Cash
Proceeds received by all Loan Parties and their Subsidiaries (and not
paid to Agent as a prepayment of the Term Loan) for all such sales or
dispositions shall exceed $250,000 since the Closing Date. Nothing
contained in this subclause (i) shall permit any Loan Party or any of
its Subsidiaries to sell or otherwise dispose of any property or assets
other than in accordance with Section 7.4.
(ii) [Intentionally Omitted.]
(iii) Upon the receipt by any Loan Party or any of
its Subsidiaries of any Extraordinary Receipts, Borrowers shall prepay
the outstanding principal of the Term Loan to the extent provided in
Section 2.4(d) with all such Extraordinary Receipts, net of any
reasonable expenses incurred in collecting such Extraordinary Receipts.
(iv) [Intentionally Omitted.]
(v) Within ten (10) Business Days of delivery to
the Agent of each of the audited annual financial statements pursuant
to Section 6.3(b) for an Fiscal Year of the Parent or, if such
financial statements are not delivered to the Agent on the date such
statements are required to be delivered pursuant to Section 6.3(b), ten
(10) Business Days after the date such statements are required to be
delivered to Agent pursuant to Section 6.3(b), Borrowers shall pay to
Agent an amount equal to the product of (x) the Applicable Excess Cash
Flow Percentage for such Fiscal Year, times (y) the Excess Cash Flow
for
29
the Fiscal Year covered by such financial statements, to be applied to
the Term Loan in accordance with Section 2.4(d).
(vi) Upon the sale or issuance by any Loan Party
or any of its Subsidiaries of any shares of its Stock, the Borrowers
shall prepay the outstanding principal amount of the Term Loan to the
extent provided in Section 2.4(d) with all of the Net Cash Proceeds
received by such Person in connection therewith. The provisions of this
subsection (x) shall not be deemed to be implied consent to any such
issuance, incurrence or sale otherwise prohibited by the terms and
conditions of this Agreement.
(d) APPLICATION OF PAYMENTS.
Each prepayment pursuant to subsections (c)(i), (c)(iii) and
(c)(vi) above shall be applied, first, to the Term Loan A under the Revolver
Loan Agreement pursuant to the prepayment requirements set forth therein with
respect such prepayments, and second, to the Term Loan to the extent not
prohibited by the terms of Section 2.4(d) or Section 7.7(a) of the Revolver Loan
Agreement. To the extent not prohibited by the terms of Section 2.4(d) or
Section 7.7(a) of the Revolver Loan Agreement, each prepayment pursuant to
subsection (c)(v) above shall be applied to prepay the principal balance of the
Term Loan. Notwithstanding the foregoing, in the case of a prepayment pursuant
to subsection (c)(vi) above, the Borrowers may, in lieu of prepaying the Term
Loan, use the Net Cash Proceeds from such sales or issuance of Stock to make an
Acquisition to the extent (i) such Acquisition is consummated on or before the
date which is ninety (90) days (the "Equity Acquisition Time Period") following
the receipt of such Net Cash Proceeds, (ii) such Acquisition will not result in
the creation or assumption by any Loan Party of any Indebtedness in connection
therewith other than for Revolver Usage, (iii) no Default or Event of Default
shall have occurred and be continuing at the time of receipt of such Net Cash
Proceeds or the consummation of such Acquisition, (iv) the Net Cash Proceeds to
be used in such Acquisition, to the extent such Acquisition does not occur on
the same day as such Net Cash Proceeds are received, are deposited into an
escrow account in which Agent is granted a first priority perfected security
interest for the sole benefit of Agent and the Lenders subject to arrangements
satisfactory to Agent (the "Escrowed Funds") until earlier of the date of such
Acquisition is consummated or the last day of the Equity Acquisition Time
Period. At the end of the Equity Acquisition Time Period, all remaining Escrowed
Funds, if any, may, at the option of Agent in its sole discretion exercised not
later than the third Business Day after the expiration of the Equity Acquisition
Time Period, be applied to prepay the Term Loan. To the extent Agent determines
not to apply the Escrowed Funds to the Term Loan, the remaining Escrowed Funds
shall be applied in accordance with the Revolver Loan Agreement. Each such
prepayment of the Term Loan shall be applied to prepay the principal of the Term
Loan. In no event shall the Borrowers be required to prepay the principal
balance of the Term Loan by more than $5,000,000 with such Net Cash Proceeds
from any sale or issuance of Stock.
2.5. [Intentionally Omitted].
2.6. INTEREST RATES: RATES, PAYMENTS, AND CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c)
below, the principal amount of the Term Loan shall bear interest on the Daily
Balance thereof at a per annum rate
30
equal to the sum of (A) the greater of (i) Base Rate plus the applicable Base
Rate Margin and (ii) twelve percent (12%) (such interest referred to herein as
the "Current Interest") plus (B) two percent (2%) (such 2% rate referred to
herein as the "Deferred Interest").
(b) [Intentionally Omitted]
(c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders), all Obligations shall bear interest on the Daily Balance
thereof at a per annum rate equal to 4 percentage points above the per annum
rate otherwise applicable hereunder, and
(d) PAYMENT. Current Interest and all other fees
payable hereunder shall be due and payable, in arrears, on the first day of each
month at any time that Obligations are outstanding; provided that with respect
to the Deferred Interest, such Deferred Interest shall accrue on a monthly basis
and shall be due and payable on the date of termination of this Agreement
whether by its terms, by prepayment or by acceleration. Borrowers hereby
authorize Agent, from time to time, without prior notice to Borrowers, to charge
such interest and fees (as and when accrued), all Lender Group Expenses (as and
when incurred), the fees and costs provided for in Section 2.11 (as and when
accrued or incurred), and all other payments as and when due and payable under
any Loan Document to Borrowers' Loan Account, which amounts thereafter shall
constitute Obligations hereunder and shall accrue interest at the rate then
applicable to Obligations hereunder; provided that Agent shall have no
obligation to charge the Loan Account with any Obligation and any charges to the
Loan Account may be made in the sole direction of the Agent.
(e) COMPUTATION. All interest and fees chargeable
under the Loan Documents shall be computed on the basis of a 360 day year for
the actual number of days elapsed. In the event the Base Rate is changed from
time to time hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE.
In no event shall the interest rate or rates payable under this Agreement, plus
any other amounts paid in connection herewith, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable. Borrowers and the Lender Group, in
executing and delivering this Agreement, intend legally to agree upon the rate
or rates of interest and manner of payment stated within it; provided, however,
that, anything contained herein to the contrary notwithstanding, if said rate or
rates of interest or manner of payment exceeds the maximum allowable under
applicable law, then, ipso facto, as of the date of this Agreement, Borrowers
are and shall be liable only for the payment of such maximum as allowed by law,
and payment received from Borrowers in excess of such legal maximum, whenever
received, shall be applied to reduce the principal balance of the Obligations to
the extent of such excess.
2.7. CASH MANAGEMENT.
(a) Borrowers shall and shall cause each of their
Subsidiaries to (i) establish and maintain cash management services of a type
and on terms satisfactory to Agent at
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one or more of the banks set forth on Schedule 2.7(a) (each a "Cash Management
Bank"), and shall request in writing and otherwise take such reasonable steps to
ensure that all of their and their Subsidiaries' Account Debtors forward payment
of the amounts owed by them directly to such Cash Management Bank, or to
Borrowers for deposit in accordance with Section 2.7(a)(ii), and (ii) deposit or
cause to be deposited promptly, and in any event no later than the first
Business Day after the date of receipt thereof, all of their Collections
(including those sent directly by their Account Debtors to a Cash Management
Bank) into a bank account in Collateral Agent's name (a "Cash Management
Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and
maintain Cash Management Agreements with Collateral Agent and Borrowers, in form
and substance acceptable to Agent. Each such Cash Management Agreement shall
provide, among other things, that (i) all items of payment deposited in such
Cash Management Account and proceeds thereof are held by such Cash Management
Bank as agent or bailee-in-possession for Collateral Agent, (ii) the Cash
Management Bank has no rights of setoff or recoupment or any other claim against
the applicable Cash Management Account, other than for payment of its service
fees and other charges directly related to the administration of such Cash
Management Account and for returned checks or other items of payment, and (iii)
except as provided in Section 2.7(f) below, it immediately will forward by daily
sweep all amounts in the applicable Cash Management Account to such account of
the Revolver Agent and/or Agent as the Collateral Agent may direct.
(c) So long as no Default or Event of Default has
occurred and is continuing, Administrative Borrower may amend Schedule 2.7(a) or
(b) to add or replace a Cash Management Account Bank or Cash Management Account;
provided, however, that (i) such prospective Cash Management Bank shall be
satisfactory to Collateral Agent and Collateral Agent shall have consented in
writing in advance to the opening of such Cash Management Account with the
prospective Cash Management Bank, and (ii) prior to the time of the opening of
such Cash Management Account, a Borrower or a Subsidiary of a Borrower, as
applicable, and such prospective Cash Management Bank shall have executed and
delivered to Collateral Agent a Cash Management Agreement. A Borrowers or a
Subsidiary of a Borrower, as applicable shall close any of their Cash Management
Accounts (and establish replacement cash management accounts in accordance with
the foregoing sentence) promptly and in any event within 30 days of notice from
Collateral Agent that the creditworthiness of any Cash Management Bank is no
longer acceptable in Collateral Agent's reasonable judgment, or as promptly as
practicable and in any event within 60 days of notice from Collateral Agent that
the operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank with respect to Cash Management Accounts
or Collateral Agent's liability under any Cash Management Agreement with such
Cash Management Bank is no longer acceptable in Collateral Agent's reasonable
judgment.
(d) The Cash Management Accounts shall be cash
collateral accounts, with all cash, checks and similar items of payment in such
accounts securing payment of the Obligations, and in which Borrowers hereby
xxxxx x Xxxx to Collateral Agent.
(e) Each of Canadian Guarantors shall (i) establish
and maintain one or more depository accounts, under the dominion and control of
Collateral Agent pursuant to a Control Agreement among Collateral Agent, such
Canadian Guarantor, and the applicable
32
Canadian financial institution, in form and substance satisfactory to Collateral
Agent, in respect of its Collections and (ii) instruct all of its Account
Debtors to remit all such Collections to such depository accounts. Each of the
Canadian Guarantors shall at all times deposit all Collections into such
accounts that are received by it from any source promptly, and in any event no
later than the first Business Day, after the date of receipt thereof.
(f) So long as no Event of Default shall have
occurred and be continuing, each Canadian Guarantor may use the funds on deposit
in its foreign bank accounts for its working capital purposes. During the
continuance of an Event of Default, Collateral Agent shall have the right to
convert all non-Dollar denominated balances in each Canadian Guarantor's foreign
bank accounts into Dollars (at Borrowers' sole expense) and cause all amounts in
such accounts to be wired into a DDA or other account subject to a Control
Agreement and then wired from such DDA to a Cash Management Account. The
arrangements contemplated in Section 2.7(e) and this Section 2.7(f) shall not be
modified by any Loan Party without the prior written consent of Agent.
2.8. CREDITING PAYMENTS. The receipt of any payment item
by Agent shall not be considered a payment on account unless such payment item
is a wire transfer of immediately available federal funds made to the Agent's
Account or unless and until such payment item is honored when presented for
payment. Should any payment item not be honored when presented for payment, then
Borrowers shall be deemed not to have made such payment and interest shall be
calculated accordingly. Anything to the contrary contained herein
notwithstanding, any payment item shall be deemed received by Agent only if it
is received into the Agent's Account on a Business Day on or before 1:00 p.m.
(Illinois time). If any payment item is received into the Agent's Account on a
non-Business Day or after 1:00 p.m. (Illinois time) on a Business Day, it shall
be deemed to have been received by Agent as of the opening of business on the
immediately following Business Day.
2.9. [Intentionally Omitted].
2.10. MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF
OBLIGATIONS. Agent shall maintain an account on its books in the name of
Borrowers (the "Loan Account") on which Borrowers will be charged with the Term
Loan, and with all other payment Obligations hereunder or under the other Loan
Documents including, accrued interest, fees and expenses, and Lender Group
Expenses. In accordance with Section 2.8, the Loan Account will be credited with
all payments received by Agent from Borrowers or for Borrowers' account Agent
shall render statements regarding the Loan Account to Administrative Borrower,
including principal, interest, fees, and including an itemization of all charges
and expenses constituting Lender Group Expenses owing, and such statements,
absent manifest error, shall be conclusively presumed to be correct and accurate
and constitute an account stated between Borrowers and the Lender Group unless,
within 30 days after receipt thereof by Administrative Borrower, Administrative
Borrower shall deliver to Agent written objection thereto describing the error
or errors contained in any such statements.
2.11. FEES. Borrowers shall pay to Agent the following fees
and charges, which fees and charges shall be non-refundable when paid
(irrespective of whether this Agreement is
33
terminated thereafter) and shall be apportioned among the Lenders in accordance
with the terms of letter agreements between Agent and individual Lenders:
(a) FEE LETTER FEES. As and when due and payable
under the terms of the Fee Letter, the fees set forth in the Fee Letter, and
(b) AUDIT, APPRAISAL, AND VALUATION CHARGES. Audit,
appraisal, and valuation fees and charges as follows (i) a fee of $850 per day,
per auditor, plus out-of-pocket expenses for each financial audit of Borrower
performed by personnel employed by Agent, (ii) a fee of $850 per day, per
applicable individual, plus out-of-pocket expenses for the establishment of
electronic collateral reporting systems, (iii) a fee of $1,500 per day per
appraiser, plus out-of-pocket expenses, for each appraisal of the Collateral, or
any portion thereof, performed by personnel employed by Agent, and (iv) the
actual charges paid or incurred by Agent if it elects to employ the services of
one or more third Persons to perform financial audits of Borrowers or their
Subsidiaries, to establish electronic collateral reporting systems, to appraise
the Collateral, or any portion thereof, or to assess Borrowers' and their
Subsidiaries' business valuation.
2.12. [Intentionally Omitted].
2.13. [Intentionally Omitted].
2.14. CAPITAL REQUIREMENTS. If, after the date hereof, any
Lender determines that (i) the adoption of or change in any law, rule,
regulation or guideline regarding capital requirements for banks or bank holding
companies, or any change in the interpretation or application thereof by any
Governmental Authority charged with the administration thereof, or (ii)
compliance by such Lender or its parent bank holding company with any guideline,
request or directive of any such entity regarding capital adequacy (whether or
not having the force of law), has the effect of reducing the return on such
Lender's or such holding company's capital as a consequence of such Lender's
Commitments hereunder to a level below that which such Lender or such holding
company could have achieved but for such adoption, change, or compliance (taking
into consideration such Lender's or such holding company's then existing
policies with respect to capital adequacy and assuming the full utilization of
such entity's capital) by any amount deemed by such Lender to be material, then
such Lender may notify Administrative Borrower and Agent thereof. Following
receipt of such notice, Borrowers agree to pay such Lender on demand the amount
of such reduction of return of capital as and when such reduction is determined,
payable within 90 days after presentation by such Lender of a statement in the
amount and setting forth in reasonable detail such Lender's calculation thereof
and the assumptions upon which such calculation was based (which statement shall
be deemed true and correct absent manifest error). In determining such amount,
such Lender may use any reasonable averaging and attribution methods.
2.15. JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each Borrower is accepting joint and several
liability hereunder and under the other Loan Documents in consideration of the
financial accommodations to be provided by the Agent and the Lenders under this
Agreement, for the mutual benefit, directly and
34
indirectly, of each Borrower and in consideration of the undertakings of the
other Borrowers to accept joint and several liability for the Obligations.
(b) Each Borrower, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Borrowers, with respect to
the payment and performance of all of the Obligations (including, without
limitation, any Obligations arising under this Section 2.15), it being the
intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers shall
fail to make any payment with respect to any of the Obligations as and when due
or to perform any of the Obligations in accordance with the terms thereof, then
in each such event the other Persons composing Borrowers will make such payment
with respect to, or perform, such Obligation.
(d) The Obligations of each Person composing
Borrowers under the provisions of this Section 2.15 constitute the absolute and
unconditional, full recourse Obligations of each Person composing Borrowers
enforceable against each such Borrower to the full extent of its properties and
assets, irrespective of the validity, regularity or enforceability of this
Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided in this
Agreement, each Person composing Borrowers hereby waives notice of acceptance of
its joint and several liability, notice of the occurrence of any Default, Event
of Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Agent or Lenders under or in respect of
any of the Obligations, any requirement of diligence or to mitigate damages and,
generally, to the extent permitted by applicable law, all demands, notices and
other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Person composing Borrowers hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment of any of the Obligations, the acceptance of any payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Agent or Lenders at any time or times
in respect of any default by any Person composing Borrowers in the performance
or satisfaction of any term, covenant, condition or provision of this Agreement,
any and all other indulgences whatsoever by Agent or Lenders in respect of any
of the Obligations, and the taking, addition, substitution or release, in whole
or in part, at any time or times, of any security for any of the Obligations or
the addition, substitution or release, in whole or in part, of any Person
composing Borrowers. Without limiting the generality of the foregoing, each
Borrower assents to any other action or delay in acting or failure to act on the
part of any Agent or Lender with respect to the failure by any Person composing
Borrowers to comply with any of its respective Obligations, including, without
limitation, any failure strictly or diligently to assert any right or to pursue
any remedy or to comply fully with applicable laws or regulations thereunder,
which might, but for the provisions of this Section 2.15 afford grounds for
terminating, discharging or relieving any Person composing Borrowers, in whole
or in part, from any of its Obligations under this Section 2.15, it being the
intention of each Person composing Borrowers that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of such Person
composing Borrowers under this Section 2.15 shall not be discharged except by
performance and then only to the extent
35
of such performance. The Obligations of each Person composing Borrowers under
this Section 2.15 shall not be diminished or rendered unenforceable by any
winding up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Person composing Borrowers or any Agent or
Lender. The joint and several liability of the Persons composing Borrowers
hereunder shall continue in full force and effect notwithstanding any
absorption, merger, amalgamation or any other change whatsoever in the name,
constitution or place of formation of any of the Persons composing Borrowers or
any Agent or Lender.
(f) Each Person composing Borrowers represents and
warrants to Agent and Lenders that such Borrower is currently informed of the
financial condition of Borrowers and of all other circumstances which a diligent
inquiry would reveal and which bear upon the risk of nonpayment of the
Obligations. Each Person composing Borrowers further represents and warrants to
Agent and Lenders that such Borrower has read and understands the terms and
conditions of the Loan Documents. Each Person composing Borrowers hereby
covenants that such Borrower will continue to keep informed of Borrowers'
financial condition, the financial condition of other guarantors, if any, and of
all other circumstances which bear upon the risk of nonpayment or nonperformance
of the Obligations.
(g) Each of the Persons composing Borrowers waives
all rights and defenses arising out of an election of remedies by the Agent or
any Lender, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation, has destroyed
the Agent's or such Lender's rights of subrogation and reimbursement against
such Borrower by the operation of Section 580(d) of the California Code of Civil
Procedure or otherwise.
(h) Each of the Persons composing Borrowers waives
all rights and defenses that such Borrower may have because the Obligations are
secured by Real Property. This means, among other things, subject to the
Intercreditor and Collateral Agency Agreement:
(i) Agent and Lenders may collect from such
Borrower without first foreclosing on any Real or Personal Property
Collateral pledged by Borrowers.
(ii) If Agent or any Lender forecloses on any
Real Property Collateral pledged by Borrowers:
A. The amount of the Obligations
may be reduced only by the price for which
that collateral is sold at the foreclosure
sale, even if the collateral is worth more
than the sale price.
B. Agent and Lenders may collect
from such Borrower even if Agent or Lenders,
by foreclosing on the Real Property
Collateral, has destroyed any right such
Borrower may have to collect from the other
Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.
36
(i) The provisions of this Section 2.15 are made for
the benefit of the Agent, the Lenders and their respective successors and
assigns, and may be enforced by it or them from time to time against any or all
of the Persons composing Borrowers as often as occasion therefor may arise and
without requirement on the part of any such Agent, Lender, successor or assign
first to marshal any of its or their claims or to exercise any of its or their
rights against any of the other Persons composing Borrowers or to exhaust any
remedies available to it or them against any of the other Persons composing
Borrowers or to resort to any other source or means of obtaining payment of any
of the Obligations hereunder or to elect any other remedy. The provisions of
this Section 2.15 shall remain in effect until all of the Obligations shall have
been paid in full or otherwise fully satisfied. If at any time, any payment, or
any part thereof, made in respect of any of the Obligations, is rescinded or
must otherwise be restored or returned by any Agent or Lender upon the
insolvency, bankruptcy or reorganization of any of the Persons composing
Borrowers, or otherwise, the provisions of this Section 2.15 will forthwith be
reinstated in effect, as though such payment had not been made.
(j) Each of the Persons composing Borrowers hereby
agrees that it will not enforce any of its rights of contribution or subrogation
against the other Persons composing Borrowers with respect to any liability
incurred by it hereunder or under any of the other Loan Documents, any payments
made by it to the Agent or the Lenders with respect to any of the Obligations or
any collateral security therefor until such time as all of the Obligations have
been paid in full in cash. Any claim which any Borrower may have against any
other Borrower with respect to any payments to any Agent or Lender hereunder or
under any other Loan Documents are hereby expressly made subordinate and junior
in right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full in cash
before any payment or distribution of any character, whether in cash, securities
or other property, shall be made to any other Borrower therefor.
(k) Each of the Persons composing Borrowers hereby
agrees that, after the occurrence and during the continuance of any Default or
Event of Default, the payment of any amounts due with respect to the
indebtedness owing by any Borrower to any other Borrower is hereby subordinated
to the prior payment in full in cash of the Obligations. Each Borrower hereby
agrees that after the occurrence and during the continuance of any Default or
Event of Default, such Borrower will not demand, xxx for or otherwise attempt to
collect any indebtedness of any other Borrower owing to such Borrower until the
Obligations shall have been paid in full in cash. If, notwithstanding the
foregoing sentence, such Borrower shall collect, enforce or receive any amounts
in respect of such indebtedness, such amounts shall be collected, enforced and
received by such Borrower as trustee for the Agent, and such Borrower shall
deliver any such amounts to Agent for application to the Obligations in
accordance with Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1. CONDITIONS PRECEDENT TO THE TERM LOAN. The obligation
of the Lender Group (or any member thereof) to make the Term Loan is subject to
the fulfillment, to the satisfaction of Agent, of each of the conditions
precedent set forth below:
37
(a) the Closing Date shall occur on or before October
31, 2003;
(b) Agent shall have received (i) the UCC Filing
Authorization Letter duly executed by each Loan Party, (ii) a statutory lien
search authorization form in respect of Canadian statutory liens against the
Canadian Guarantors, (iii) satisfactory evidence of the filing of all UCC and
PPSA financing statements in such office or offices as may be necessary or, in
the opinion of Agent, desirable to perfect the security interests purported to
be created by each applicable Loan Document, and (iv) the results of its UCC,
PPSA, judgment and tax lien searches, which searches shall not have revealed any
Liens on the assets or properties of the Loan Parties other than Permitted Liens
and Liens to be terminated on the Closing Date;
(c) Agent shall have received each of the following
documents, in form and substance satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:
(i) the Promissory Notes,
(ii) the Cash Management Agreements,
(iii) the Control Agreements,
(iv) the Copyright Security Agreement,
(v) [Intentionally Omitted],
(vi) the Due Diligence Certificate,
(vii) the Fee Letter,
(viii) the Canadian Documents, together with (A)
all certificates representing the shares of Stock pledged thereunder,
as well as Stock powers with respect thereto endorsed in blank, and (B)
all promissory notes pledged thereunder, as well as allonges thereto or
other appropriate transfer certificates endorsed in blank,
(ix) the Validity and Support Agreements (other
than the Validity and Support Agreement signed by Xxxxx X. Xxxxxx,
(x) the Intercompany Subordination Agreement,
(xi) the Mortgages,
(xii) Flow of Funds Agreement,
(xiii) the Patent Security Agreement,
(xiv) each Pay-Off Letter, together with UCC and
PPSA termination statements and other documentation evidencing the
termination by Existing Lenders of their respective Liens in and to the
properties and assets of Borrowers and their
38
Subsidiaries (or written authorization of the Existing Lenders for the
Collateral Agent to file such UCC and PPSA termination statements),
(xv) the Pledge Agreement, together with (i) all
certificates representing the shares of Stock pledged thereunder, as
well as Stock powers with respect thereto endorsed in blank, and (ii)
all promissory notes pledged thereunder, together with an allonge for
each promissory note (or the written agreement of the Existing Lenders
to deliver such Stock certificates and promissory notes to the
Collateral Agent within one Business Day of the Closing Date, subject
to such other terms and conditions as the Collateral Agent may
reasonably require),
(xvi) the Trademark Security Agreement,
(xvii) the Security Agreement;
(xviii) the Contribution Agreement;
(xix) the Intercreditor and Collateral Agency
Agreement;
(xx) the Warrant;
(xxi) the Warrantholders Rights Agreements; and
(xxii) the Warrant Valuation Letter.
(d) Agent shall have received a certificate from the
Secretary of each Borrower attesting to the resolutions of such Borrower's Board
of Directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which such Borrower is a party and
authorizing specific officers of such Borrower to execute the same;
(e) Agent shall have received copies of each
Borrower's Governing Documents, as amended, modified, or supplemented to the
Closing Date, certified by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status
with respect to each Borrower, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower, which certificate shall indicate that such
Borrower is in good standing in such jurisdiction;
(g) Agent shall have received certificates of status
with respect to each Borrower, each dated as of a date acceptable to Agent, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Borrower) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;
(h) Agent shall have received a certificate from the
Secretary of each Guarantor attesting to the resolutions of such Guarantor's
Board of Directors authorizing its
39
execution, delivery, and performance of the Loan Documents to which such
Guarantor is a party and authorizing specific officers of such Guarantor to
execute the same;
(i) Collateral Agent shall have received copies of
each Guarantor's Governing Documents, as amended, modified, or supplemented to
the Closing Date, certified by the Secretary of such Guarantor;
(j) Collateral Agent shall have received a
certificate of status with respect to each Guarantor, dated within 10 days of
the Closing Date, such certificate to be issued by the appropriate officer of
the jurisdiction of organization of such Guarantor, which certificate shall
indicate that such Guarantor is in good standing in such jurisdiction;
(k) Agent shall have received certificates of status
with respect to each Guarantor, each dated as of a date acceptable to Agent,
such certificates to be issued by the appropriate officer of the jurisdictions
(other than the jurisdiction of organization of such Guarantor) in which its
failure to be duly qualified or licensed would constitute a Material Adverse
Change, which certificates shall indicate that such Guarantor is in good
standing in such jurisdictions;
(l) Collateral Agent shall have received a
certificate of insurance, together with the endorsements thereto, as are
required by Section 6.8, the form and substance of which shall be satisfactory
to Agent;
(m) Collateral Agent shall have received (i)
Collateral Access Agreements with respect to the Leased Real Property where the
Loan Parties Eligible Equipment or books and records are maintained (other than
the Florida Headquarters), except to the extent Revolver Agent has established a
Rent Reserve against the Borrowing Base for such Leased Real Property location
and (ii) a Collateral Access Agreement executed by the owner of the Florida
Headquarters;
(n) Agent shall have received opinions of Borrowers'
and Guarantors' counsel in form and substance satisfactory to Agent;
(o) Agent shall have received satisfactory evidence
(including a certificate of the chief financial officer of Parent) that all tax
returns required to be filed by Borrowers and their Subsidiaries have been
timely filed and all taxes upon Borrowers and their Subsidiaries or their
properties, assets, income, and franchises (including Real Property taxes, sales
taxes, payroll taxes and excise taxes) have been paid prior to delinquency,
except such taxes that are the subject of a Permitted Protest or otherwise
permitted to remain unpaid under Section 6.7;
(p) after giving effect to (i) the extension of
credit hereunder and the payment of all fees and expenses required to be paid by
Borrowers on the Closing Date under this Agreement or the other Loan Documents,
and (ii) the extensions of credit under the Revolver Loan Agreement and the
payment of all fees and expenses required to be paid by Borrowers on the Closing
Date under the Revolver Loan Agreement (and the other Revolver Loan Documents),
(A) the Borrowers shall have the Required Availability and (B) the Senior Debt
Ratio shall not exceed 3.5 to 1.0.
40
(q) Agent shall have completed its business, legal,
and collateral due diligence, including (i) a collateral audit and review of
Borrowers' books and records and verification of Borrowers' representations and
warranties to the Lender Group, the results of which shall be satisfactory to
Agent (such audit and review to be comprised of both a prospect audit and a
takeover audit, and to include, but not be limited to, customer verifications,
cash testing, and machinery and equipment verification), (ii) review and
satisfaction with a disaster recovery plan for IPD, and review and satisfaction
with a Phase I and Phase II Environmental Assessment Study from environmental
consultants acceptable to Agent for the Quincy, Illinois facility owned by Xxxx
Xxxxxx and the Philadelphia, Pennsylvania facility owned by Source-Xxxxxx
Industries, Inc.;
(r) Agent shall have received completed reference
checks with respect to Loan Parties' senior management, the results of which are
satisfactory to Agent in its sole discretion;
(s) Agent shall have received an appraisal of the Net
Liquidation Percentage applicable to Borrowers' and their Subsidiaries'
Equipment, the results of which shall be satisfactory to Agent;
(t) Agent shall have received Borrowers' Closing Date
Business Plan;
(u) Borrowers shall have paid all Lender Group
Expenses incurred in connection with the transactions evidenced by this
Agreement;
(v) Agent or Collateral Agent, as applicable, shall
have received (i) appraisals of the Real Property Collateral set forth in Part I
of Schedule R-1 satisfactory to Agent, and (ii) mortgagee title insurance
policies (or marked commitments to issue the same) for such Real Property
Collateral issued by a title insurance company satisfactory to Agent and
Collateral Agent (each a "Mortgage Policy" and, collectively, the "Mortgage
Policies") in amounts satisfactory to Collateral Agent assuring Agent and
Collateral Agent that the Mortgages on such Real Property Collateral are valid
and enforceable first priority mortgage Liens on such Real Property Collateral
free and clear of all defects and encumbrances except Permitted Liens, and the
Mortgage Policies otherwise shall be in form and substance satisfactory to Agent
and Collateral Agent (the Real Property Collateral referred to in this Section
3.1(v) is referred to herein as the "Eligible Real Property Collateral";
(w) Agent shall have received a phase-I environmental
report and a real estate survey with respect to each parcel composing the
Eligible Real Property Collateral; the environmental consultants and surveyors
retained for such reports or surveys, the scope of the reports or surveys, and
the results thereof shall be acceptable to Agent;
(x) Agent shall have received copies of each of (A)
the existing collective bargaining agreements, and (B) all Material Contracts
together with a certificate of the Secretary of Administrative Loan Party
certifying each such document as being a true, correct, and complete copy
thereof;
(y) Borrowers and each of their Subsidiaries shall
have received all licenses, approvals or evidence of other actions required by
any Governmental Authority in
41
connection with the execution and delivery by Borrowers or their Subsidiaries of
the Loan Document or with the consummation of the transactions contemplated
thereby;
(z) the Agent shall have received copies of the
Revolver Loan Agreement and all other Revolver Loan Documents, each of which
shall be in form and substance satisfactory to Agent together with a certificate
of the Secretary of the Administrative Borrower certifying each such document as
being a true, correct, and complete copy thereof;
(aa) Borrowers shall have obtained the key man life
insurance policies required pursuant to Section 6.8(d) and shall have furnished
Collateral Agent with an "Absolute Assignment" for each such policy in
accordance with such Section 6.8(d);
(bb) the Loan Parties shall have implemented the
electronic reporting system described in Section 6.2,
(cc) the Revolver Agent shall have received by wire
transfer of immediately available funds any Qualified Cash necessary for
Borrowers to have the Required Availability in accordance with subsection (p)
above,
(dd) all other documents and legal matters in
connection with the transactions contemplated by this Agreement shall have been
delivered, executed, or recorded and shall be in form and substance satisfactory
to Agent,
(ee) the representations and warranties contained in
this Agreement and the other Loan Documents shall be true and correct in all
material respects on and as of the date of the extension of the Term Loan
(except to the extent that such representations and warranties relate solely to
an earlier date),
(ff) no Default or Event of Default shall have
occurred and be continuing on the date of the extension of the Term Loan, nor
shall either result from the making thereof,
(gg) no injunction, writ, restraining order, or other
order of any nature restricting or prohibiting, directly or indirectly, the
extension of the Term Loan shall have been issues and remain in force by any
Governmental Authority against any Borrower, Agent, any Lender, or any of their
Affiliates;
(hh) no Material Adverse Change shall have occurred;
and
(ii) the Agent or one of its representatives shall
have interviewed certain key customers of the Loan Parties the results of which
are satisfactory to Agent.
42
3.2. CONDITIONS SUBSEQUENT TO THE TERM LOAN. On or before
the date applicable thereto, of each of the conditions subsequent set forth
below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to
Agent certified copies of the policies of insurance, together with the
endorsements thereto, as are required by Section 6.8, the form and substance of
which shall be satisfactory to Agent and its counsel;
(b) promptly after completion, deliver to Agent a
copy of the valuation report with respect to the Enterprise Value of the Parent
and its Subsidiaries of Xxxxx Xxxxxx and Company LLP performed on behalf of the
Revolver Agent;
(c) within 45 days of the Closing Date, Agent shall
have received the results of the Canadian statutory lien searches which shall be
deemed acceptable to Agent;
(d) within 30 days of the Closing Date, the Loan
Parties shall have implemented the electronic reporting system described in
Section 6.2;
(e) within 30 days of the Closing Date, Agent shall
have received a zoning compliance letter (the "Zoning Letter") for the property
located at 0000 Xxxx Xxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx, issued by the
applicable municipality where such property is located and in the event the
Zoning Letter discloses that such property is not in compliance with any
applicable zoning laws, regulations, ordinances and/or rules, Borrowers will use
commercially reasonable efforts to cure and correct any such non-compliance with
any applicable zoning laws, regulations, ordinances or rules to the reasonable
satisfaction of Agent;
(f) within 30 days of the Closing Date, Agent shall
have received Cash Management Agreements for the Deposit Accounts of the
Canadian Guarantors,
(g) within 30 days of the Closing Date, use
commercially reasonable efforts to provide Agent with a representative sample,
reasonably acceptable to the Agent, of the contracts between the retailers and
the publishers related to the In-Store Services/Claiming Accounts (as defined in
the Revolver Loan Agreement) arising under the retail display payment claiming
business of US Marketing Services;
(h) Borrowers shall use their reasonable efforts to
deliver a fully executed Validity and Support Agreement signed by Xxxxx X.
Xxxxxx;
(i) not later than November 3, 2003, deliver to the
Collateral Agent Cash Management Agreements executed by Wachovia Bank, National
Association for account no. 2000020370747;
(j) provided that Agent shall have tendered all
applicable documents required pursuant to the Warrant, Administrative Borrower
shall have issued within ten (10) days from the Closing Date new warrants to the
financial participants of Hilco requesting the same with appropriate adjustment
in the Warrant held by Hilco;
43
(k) at least 60 days prior to the expiration of the
collective bargaining agreement referred to in Section 3.1(x), a satisfactory
update of the negotiations for a new collective bargaining agreement or of
alternate plans for continued operation; and
(l) within 30 days of the Closing Date, Agent shall
have received the results of litigation searches with respect to the Loan
Parties specified in Schedule L-2 for the jurisdiction specified in such
Schedule;
3.3. [Intentionally Omitted].
3.4. TERM. This Agreement shall continue in full force and
effect for a term ending on October 30, 2006 (the earlier of (i) such date and
(ii) the termination of this Agreement, whether by its terms, by prepayment or
by acceleration, the "Maturity Date"). The foregoing notwithstanding, the Lender
Group, upon the election of the Required Lenders, shall have the right to
terminate this Agreement immediately and without notice upon the occurrence and
during the continuation of an Event of Default.
3.5. EFFECT OF TERMINATION. On the date of termination of
this Agreement, all Obligations immediately shall become due and payable without
notice or demand. No termination of this Agreement, however, shall relieve or
discharge Borrowers or their Subsidiaries of their duties, Obligations, or
covenants hereunder and the Collateral Agent's Liens in the Collateral shall
remain in effect until all Obligations have been paid in full and the Lender
Group's obligations to provide additional credit hereunder have been terminated.
When this Agreement has been terminated and all of the Obligations have been
paid in full, Agent will, at Borrowers' sole expense, direct Collateral Agent to
execute and deliver any UCC or PPSA termination statements, lien releases,
mortgage releases, re-assignments of trademarks, discharges of security
interests, and other similar discharge or release documents (and, if applicable,
in recordable form) as are reasonably necessary to release, as of record, the
Collateral Agent's Liens and all notices of security interests and liens
previously filed by Agent with respect to the Obligations.
4. [INTENTIONALLY OMITTED].
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this
Agreement, each Loan Party makes the following representations and warranties to
the Lender Group which shall be true, correct, and complete, in all material
respects, as of the Closing Date and such representations and warranties shall
survive the execution and delivery of this Agreement:
5.1. NO ENCUMBRANCES. Each Loan Party and its Subsidiaries
has good and indefeasible title to their personal property assets and good and
marketable title to their Real Property, in each case, free and clear of Liens
except for Permitted Liens.
5.2. ELIGIBLE ACCOUNTS. The Eligible Accounts are bona
fide existing payment obligations of Account Debtors created by the sale and
delivery of Inventory or the rendition of services to such Account Debtors in
the ordinary course of Loan Parties' business, owed to Eligible Loan Parties
without any known defenses, disputes, offsets, counterclaims, or rights of
44
return or cancellation. As to each Account that is identified by Administrative
Borrower as an Eligible Account in a borrowing base report submitted to Agent,
such Account is not excluded as ineligible by virtue of one or more of the
excluding criteria set forth in the definition of Eligible Accounts.
5.3. BUSINESS SEGMENTS. Schedule S-1 accurately sets forth
each Business Segment of the Loan Parties and the Subsidiaries of Parent
included in each such Business Segment as of the Closing Date.
5.4. ELIGIBLE EQUIPMENT. All of the Eligible Equipment is
used or held for use in Loan Parties' business and is fit for such purposes. As
to each item of Equipment that is identified from time to time by Administrative
Borrower as Eligible Equipment, such Equipment is not excluded as ineligible by
virtue of one or more of the excluding criteria set forth in the definition of
Eligible Equipment.
5.5. LOCATION OF INVENTORY AND EQUIPMENT. The Inventory
and Equipment of Borrowers and their Subsidiaries are located only at, or
in-transit between, the locations identified on Schedule 5.5 (as such Schedule
may be updated pursuant to Section 6.9), and the Equipment of the Loan Parties
are not stored with a bailee, warehouseman, or similar party.
5.6. INVENTORY RECORDS. Each Loan Party keeps correct,
accurate and reasonably detailed records of its and its Subsidiaries' Inventory
and the book value thereof.
5.7. STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE
OFFICE; FEIN; ORGANIZATIONAL ID NUMBER; COMMERCIAL TORT CLAIMS.
(a) The jurisdiction of organization of each Loan
Party is set forth on Schedule 5.7(a).
(b) The chief executive office of each Loan Party is
located at the address indicated on Schedule 5.7(b) (as such Schedule may be
updated pursuant to Section 6.9).
(c) Each Loan Party's FEIN and organizational
identification number, if any, are identified on Schedule 5.7(c).
(d) As of the Closing Date, Loan Parties and their
Subsidiaries do not hold any commercial tort claims, except as set forth on
Schedule 5.7(d).
5.8. DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each Loan Party is duly organized and existing
and in good standing under the laws of the jurisdiction of its organization and
qualified to do business in any state, province or territory where the failure
to be so qualified reasonably could be expected to have a Material Adverse
Change.
(b) Set forth on Schedule 5.8(b), is a complete and
accurate description of the authorized capital Stock of each Loan Party, by
class, and, as of the Closing Date, a description of the number of shares of
each such class that are issued and outstanding. Other
45
than as described on Schedule 5.8(b), there are no subscriptions, options,
warrants, or calls relating to any shares of each Loan Party's capital Stock,
including any right of conversion or exchange under any outstanding security or
other instrument. No Loan Party is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital Stock or any security convertible into or exchangeable for any of its
capital Stock.
5.9. DUE AUTHORIZATION; NO CONFLICT.
(a) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the other Loan Documents to
which it is a party have been duly authorized by all necessary action on the
part of such Borrower.
(b) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the other Loan Documents to
which it is a party do not and will not (i) violate any provision of federal,
state, or local law or regulation applicable to any Borrower, the Governing
Documents of any Borrower, or any order, judgment, or decree of any court or
other Governmental Authority binding on any Borrower, (ii) conflict with, result
in a breach of, or constitute (with due notice or lapse of time or both) a
default under any material contractual obligation of any Borrower, (iii) result
in or require the creation or imposition of any Lien of any nature whatsoever
upon any properties or assets of Borrower, other than Permitted Liens, or (iv)
require any approval of any Borrower's equityholders or any approval or consent
of any Person under any material contractual obligation of any Borrower, other
than consents or approvals that have been obtained and that are still in force
and effect.
(c) Other than the filing of financing statements and
the recordation of the Mortgages and the filings of a report with the SEC on
Form 8-K with the SEC regarding this transaction, the execution, delivery, and
performance by each Borrower of this Agreement and the other Loan Documents to
which such Borrower is a party do not and will not require any registration
with, consent, or approval of, or notice to, or other action with or by, any
Governmental Authority, other than consents or approvals that have been obtained
and that are still in force and effect.
(d) As to each Borrower, this Agreement and the other
Loan Documents to which such Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.
(e) The Collateral Agent's Liens are validly created,
perfected, and first priority Liens, subject only to Permitted Liens
(f) The execution, delivery, and performance by each
Guarantor of the Loan Documents to which it is a party have been duly authorized
by all necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each
Guarantor of the Loan Documents to which it is a party do not and will not (i)
violate any provision of federal,
46
state, or local law or regulation applicable to such Guarantor, the Governing
Documents of such Guarantor, or any order, judgment, or decree of any court or
other Governmental Authority binding on such Guarantor, (ii) conflict with,
result in a breach of, or constitute (with due notice or lapse of time or both)
a default under any material contractual obligation of such Guarantor, (iii)
result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of such Guarantor, other than Permitted
Liens, or (iv) require any approval of such Guarantor's interestholders or any
approval or consent of any Person under any material contractual obligation of
such Guarantor, other than consents or approvals that have been obtained and
that are still in force and effect.
(h) Other than the filing of financing statements and
the recordation of the Mortgages, the execution, delivery, and performance by
each Guarantor of the Loan Documents to which such Guarantor is a party do not
and will not require any registration with, consent, or approval of, or notice
to, or other action with or by, any Governmental Authority, other than consents
or approvals that have been obtained and that are still in force and effect.
(i) The Loan Documents to which each Guarantor is a
party, and all other documents contemplated hereby and thereby, when executed
and delivered by such Guarantor will be the legally valid and binding
obligations of such Guarantor, enforceable against such Guarantor in accordance
with their respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors' rights generally.
5.10. LITIGATION. Other than those matters disclosed on
Schedule 5.10, there are no actions, suits, or proceedings pending or, to the
best knowledge of Borrowers, threatened against Loan Parties, or any of their
Subsidiaries, as applicable, except for (a) matters that are fully covered by
insurance (subject to customary deductibles), (b) matters that if decided
adversely to any Loan Party could not reasonably be expected to result in
liability to the Loan Parties of $500,000 in the aggregate for all such matters,
and (c) matters arising after the Closing Date that, if decided adversely to
Loan Parties, or any of their Subsidiaries, as applicable, reasonably could not
be expected to result in a Material Adverse Change.
5.11. NO MATERIAL ADVERSE CHANGE. All financial statements
relating to Loan Parties and their Subsidiaries that have been delivered by Loan
Parties to the Lender Group have been prepared in accordance with GAAP (except,
in the case of unaudited financial statements, for the lack of footnotes and
being subject to year-end audit adjustments) and present fairly in all material
respects, Loan Parties' and their Subsidiaries' financial condition as of the
date thereof and results of operations for the period then ended. There has not
been a Material Adverse Change with respect to Loan Parties and their
Subsidiaries since the date of the latest financial statements submitted to the
Lender Group on or before the Closing Date.
5.12. FRAUDULENT TRANSFER.
(a) Each Loan Party and each Subsidiary of a Borrower
is Solvent.
(b) No transfer of property is being made by any Loan
Party or any Subsidiary of a Loan Party and no obligation is being incurred by
any Loan Party or any
47
Subsidiary of a Loan Party in connection with the transactions contemplated by
this Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of Loan Parties or their
Subsidiaries.
5.13. EMPLOYEE BENEFITS.
(a) None of Loan Parties, any of their Subsidiaries,
or any of their ERISA Affiliates maintains or contributes to any Benefit Plan,
other than those listed on Schedule 5.13.
(b) Each Loan Party, each of its Subsidiaries and
each ERISA Affiliate have satisfied the minimum funding standards of ERISA and
the IRC with respect to each Benefit Plan to which it is obligated to
contribute.
(c) No ERISA Event has occurred nor has any other
event occurred that may result in an ERISA Event that reasonably could be
expected to result in a Material Adverse Change.
(d) No Loan Party or its Subsidiaries or any ERISA
Affiliate is required to provide security to any Benefit Plan under Section
401(a)(29) of the IRC.
(e) Except as set forth in Schedule 5.13, no Canadian
Guarantor, has, or is subject to, any present or future obligation or liability
under, any pension plan, deferred compensation plan, retirement income plan,
stock option or stock purchase plan, profit sharing plan, bonus plan or policy,
employee group insurance plan, program policy or practice, formal or informal,
with respect to its employees.
(f) Schedule 5.13 lists all the employee benefit,
health, welfare, supplemental unemployment benefit, bonus, pension, profit
sharing, deferred compensation, stock compensation, stock purchase, retirement,
hospitalization insurance, medical, dental, legal, disability and similar plans
or arrangements or practices relating to the employees or former employees of
each Canadian Guarantor which are currently maintained or were maintained at any
time in the last five calendar years (the "Employee Plans").
(g) All of the Employee Plans are and have been
established, registered, qualified, invested and administered in all respects in
accordance with all Laws applicable to the Employee Plans. No fact or
circumstance exists that cold adversely affect the tax-exempt status of an
Employee Plan.
(h) All obligations regarding the Employee Plans have
been satisfied, there are no outstanding defaults or violations by any part to
any Employee Plan and no taxes, penalties or fees are owing or eligible under
any of the Employee Plans.
(i) No amendments have been made to any Employee Plan
and no improvements to any Employee Plan have been promised and no amendments or
improvements to an Employee Plan will be made or promised by any Canadian
Guarantor before the Closing Date.
48
(j) Each Canadian Guarantor has furnished to the
Lenders true, correct and complete copies of all the Employee Plans as amended
as of the date hereof together with all related documentation including funding,
agreements, actuarial reports, funding and financial information returns and
statements, all professional opinions (whether or not internally prepared) with
respect to each Employee Plan, all material internal memoranda concerning the
Employee Plans, copies of material correspondence with all regulatory
authorities with respect to each Employee Plan and plan summaries, booklets and
personnel manuals. No material changes have occurred to the Employee Plans or
are expected to occur which would affect the actuarial reports or financial
statements required to be provided to the Lenders pursuant to this Schedule
5.13.
(k) Except as disclosed in Schedule 5.13, each
Employee Plan is fully funded or fully insured on both an ongoing and solvency
basis pursuant to the actuarial assumptions and methodology set out in Schedule
5.13.
(l) Except as disclosed in Schedule 5.13, none of the
Employee Plans provides benefits to retired employees or to the beneficiaries or
dependents of retired employees.
5.14. ENVIRONMENTAL CONDITION. Except as set forth on
Schedule 5.14, (a) to any Loan Party's knowledge, none of Loan Parties' or their
Subsidiaries' properties or assets has ever been used by Loan Parties, their
Subsidiaries, or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such production, storage, handling, treatment, release or transport was in
violation, in any material respect, of applicable Environmental Law, (b) to any
Loan Party's knowledge, none of Loan Parties' nor their Subsidiaries' properties
or assets has ever been designated or identified in any manner pursuant to any
Environmental Law statute as a Hazardous Materials disposal site, (c) none of
Loan Parties nor any of their Subsidiaries have received notice that a Lien
arising under any Environmental Law has attached to any revenues or to any Real
Property owned or operated by Loan Parties or their Subsidiaries, and (d) none
of Loan Parties nor any of their Subsidiaries have received a summons, citation,
order, notice, notice of Environmental Action, or directive from the
Environmental Protection Agency or any other Governmental Authority concerning
any action or omission by any Loan Party or any Subsidiary of a Loan Party
resulting in the releasing or disposing of Hazardous Materials into the
environment.
5.15. BROKERAGE FEES. Loan Parties and their Subsidiaries
have not utilized the services of any broker or finder in connection with
obtaining financing from the Lender Group under this Agreement and no brokerage
commission or finders fee is payable by Loan Parties or their Subsidiaries in
connection herewith.
5.16. INTELLECTUAL PROPERTY. Each Loan Party and each
Subsidiary of a Loan Party owns, or holds licenses in, all trademarks, trade
names, copyrights, patents, patent rights, and licenses that are necessary to
the conduct of its business as currently conducted. Attached hereto as Schedule
5.16 (as updated from time to time) is a true, correct, and complete listing of
all material patents, patent applications, trademarks, trademark applications,
copyrights, and copyright registrations as to which each Loan Party or one of
its Subsidiaries is the owner or is an exclusive licensee.
49
5.17. LEASES. Loan Parties and their Subsidiaries enjoy
peaceful and undisturbed possession under all leases material to their business
and to which they are parties or under which they are operating. All of such
leases are valid and subsisting and no material default by Loan Parties or their
Subsidiaries exists under any of them.
5.18. DDAS. Set forth on Schedule 5.18 are all of Loan
Parties' and their Subsidiaries' Deposit Accounts and Securities Accounts,
including, with respect to each bank or securities intermediary (i) the name and
address of such Person, and (ii) the account numbers of the Deposit Accounts or
Securities Accounts maintained with such Person.
5.19. COMPLETE DISCLOSURE. All factual information (taken
as a whole) furnished by or on behalf of Loan Parties or their Subsidiaries in
writing to Agent or any Lender (including all information contained in the
Schedules hereto or in the other Loan Documents) for purposes of or in
connection with this Agreement, the other Loan Documents or any transaction
contemplated herein or therein is, and all other such factual information (taken
as a whole) hereafter furnished by or on behalf of Loan Parties or their
Subsidiaries in writing to the Agent or any Lender will be, true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Business Plan represents, and as
of the date on which any other Projections are delivered to Agent, such
additional Projections represent Loan Parties' good faith best estimate of their
and their Subsidiaries' future performance for the periods covered thereby.
5.20. INDEBTEDNESS. Set forth on Schedule 5.20 is a true
and complete list of all Indebtedness of each Loan Party outstanding immediately
prior to the Closing Date that is to remain outstanding after the Closing Date
and the aggregate principal amount of such Indebtedness as of the Closing Date
and the interest rate, amortization schedule and term are accurately set forth
in such Schedule.
5.21. REGULATION U. None of the Loan Parties is nor will be
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulations T, U or X of the Board
of Governors of the Federal Reserve System), and no proceeds of the Term Loan
will be used to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock.
5.22. PERMITS, ETC.. Each Loan Party has, and is in
compliance with, all permits, licenses, franchises, authorizations, approvals,
entitlements and accreditations required for such Person lawfully to own, lease,
manage or operate, or to acquire, each business and the Real Property currently
owned, leased, managed or operated, or to be acquired, by such Person except for
such permits, licenses, franchises, authorizations, approvals, entitlements and
accreditations the absence of which could not reasonably be expected to result
in a Material Adverse Change. No condition exists or event has occurred which,
in itself or with the giving of notice or lapse of time or both, would result in
the suspension, revocation, impairment, forfeiture or non-renewal of any such
permit, license, franchises, authorization, approval, entitlement or
accreditation, and to Loan Parties' knowledge, there is no claim that any
thereof is not in full force and effect.
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5.23. MATERIAL CONTRACTS. Set forth on Schedule 5.23 is a
complete and accurate list as of the Closing Date of all Material Contracts of
the Loan Parties, showing the parties and subject matter thereof and amendments
and modifications thereto. Each such Material Contract (i) is in full force and
effect and is binding upon and enforceable against each Loan Party that is a
party thereto and, to Loan Parties' knowledge, all other parties thereto in
accordance with its terms, (ii) has not been otherwise amended or modified, and
(iii) is not in default due to the action of any Loan Party or, to Loan Parties'
knowledge, any other party thereto, except for such defaults that could not
reasonably be expected to result in a Material Adverse Change.
5.24. EMPLOYEE AND LABOR MATTERS. Except in each case where
any such matter could not reasonably be expected to result in a Material Adverse
Change, there is (a) no unfair labor practice complaint pending or, to Loan
Parties' knowledge, threatened against any Loan Party before any Governmental
Authority and no grievance or arbitration proceeding pending or threatened
against any Loan Party which arises out of or under any collective bargaining
agreement, (b) no strike, labor dispute, slowdown, stoppage or similar action or
grievance pending or, to the best knowledge of Loan Parties, threatened against
any Loan Party and (c) no union representation question existing with respect to
the employees of any Loan Party and no union organizing activity taking place
with respect to any of the employees of any of them. Neither any Loan Party nor
any ERISA Affiliate of any Loan Party has incurred any liability or obligation
under the Worker Adjustment and Retraining Notification Act ("WARN") or similar
state law, which remains unpaid or unsatisfied. The hours worked and payments
made to employees of each Loan Party have not been in violation of the Fair
Labor Standards Act or any other applicable legal requirements. All material
payments due from any Loan Party on account of workers compensation, wages and
employee health and welfare insurance and other benefits have been paid or
accrued as a liability on the books of such Loan Party.
5.25. CUSTOMERS AND SUPPLIERS. There exists no actual or,
to Loan Parties' knowledge, threatened termination, cancellation or limitation
of, or modification to or change in, the business relationship between (a) any
Loan Party, on the one hand, and any customer or any group thereof, on the other
hand or (b) any Loan Party, on the one hand, and any supplier thereof or
distributor therefor, on the other hand, which termination, cancellation,
limitation, modification or change in any such case could, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Change.
5.26. COMMON STOCK PRICE. The closing market bid price for
the Common Stock of the Parent on July 14, 2003 was $8.04 per share.
5.27. REAFFIRMATION. Each of the representations and
warranties contained in this Agreement and in the other Loan Documents shall be
deemed automatically reaffirmed by each Borrower each day on which a Borrowing
Base Certificate is due under the Revolver Loan Agreement while any Obligations
remain outstanding (except those which specifically refer to an earlier date).
5.28. PAYMENTS TO EMPLOYEES AND OTHERS. Each Canadian
Guarantor has paid or accrued as a liability on the books of such Canadian
Guarantor, all material payments due from any Canadian Guarantor to any
employee, independent contractor, Person or Governmental
51
Authority on account of workers' compensation, wages or other compensation and,
as applicable, employee health and welfare insurance and other benefits.
5.29. WITHHOLDINGS AND REMITTANCES. Each Canadian Guarantor
has withheld from each payment made to any of its present or former employees,
officers and directors, and to all persons who are non-residents of Canada for
the purposes of the Canadian Income Tax Act all amounts required by law to be
withheld, including without limitation all payroll deductions required to be
withheld, and furthermore, has remitted such withheld amounts within the
prescribed periods to the appropriate Governmental Authority. Each Canadian
Guarantor has remitted all Canada Pension Plan contributions, provincial pension
plan contributions, employment insurance premiums, employer health taxes and
other taxes payable by it in respect of its employees and has remitted such
amounts to the proper Governmental Authority within the time required under the
applicable law.
6. AFFIRMATIVE COVENANTS..
Each Loan Party covenants and agrees that, until the payment
in full of the Obligations and the termination of this Agreement, each Loan
Party shall and shall cause each of its respective Subsidiaries to do all of the
following:
6.1. ACCOUNTING SYSTEM. Maintain a system of accounting
that enables Loan Parties to produce financial statements in accordance with
GAAP and maintain records pertaining to the Collateral that contain information
as from time to time reasonably may be requested by Agent. Loan Parties also
shall keep an inventory reporting system that shows all additions, sales,
claims, returns, and allowances with respect to their and their Subsidiaries'
Inventory.
6.2. COLLATERAL REPORTING. Provide Agent (and if so
requested by Agent, with copies for each Lender) with the following documents at
the following times in form satisfactory to Agent:
Daily (a) a collection journal
Weekly
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(b) a sales journal and credit register
since the last such schedule, a report
regarding credit memoranda that have been
issued since the last such report, and a
calculation of the Borrowing Base as of such
date,
(c) notice of all claims, offsets,
or disputes asserted by Account Debtors with
respect to Loan Parties' and their
Subsidiaries' Accounts;
(d) a roll-forward calculation of
the Borrowing Base, provided that with
respect to Eligible Accounts owing by
Canadian Account Debtors, such calculations
may, at the option of the Administrative
Borrower, be updated on only a monthly
basis, and
(e) a detailed transaction register
for cash, sales and credits by Business
Segment,
Monthly (not later (f) a detailed aging, by total, of
than the 15th day the Accounts of Loan Parties, together with
of each month a reconciliation to the calculation of the
except that the Borrowing Base previously provided to Agent
first such report (including detail regarding those Accounts
shall be delivered of Loan Parties that are not Eligible
not later than Accounts), as well as a roll-forward,
November 20, 2003)
(g) a summary aging, by vendor, of
Loan Parties' and their Subsidiaries'
accounts payable and any book overdraft,
together with a report of accrued expenses
and general ledger reconciliation,
(h) a detailed report regarding
Loan Parties' and their Subsidiaries' cash
and Cash Equivalents including an indication
of which amounts constitute Qualified Cash,
(i) a calculation of Dilution, by
Business Segment, for the month most
recently ended and for the three and twelve
month periods then ended,
53
(j) a calculation of average Excess
Availability for the three-month period then
ended,
(k) a month-end gross Accounts to
net Accounts report for the In-Store
Services/Wire Business Segment of the Loan
Parties,
(l) a gross receivables aging by
job for the In-Store Services/Wire Business
Segment of the Loan Parties, and
(m) a copy of the report submitted
to the issuer of the Loan Parties' credit
insurance policy, including an aging of
foreign customers' receivables, and
including applicable customer credit
insurance limits and limits by country,
Quarterly (n) a detailed list of each Loan
Party's and each Subsidiary of a Loan
Party's customers,
(o) a summary Inventory report of the
Loan Parties by location,
(p) a report regarding each Loan
Party's and each Subsidiary of a Loan
Party's accrued, but unpaid, ad valorem
taxes, and
(q) a listing of all new customer
or supplier contracts executed by any Loan
Party during the prior quarter,
Upon request by (r) copies of invoices in
Agent connection with Loan Parties' and their
Subsidiaries' Accounts, credit memos,
remittance advices, deposit slips, shipping
and delivery documents in connection with
Loan Parties' and their Subsidiaries'
Accounts and, for Equipment acquired by Loan
Parties or their Subsidiaries, purchase
orders and invoices,
(s) contract reporting in respect
of the Wood Manufacturing Business Segment,
(t) a report in form and substance
satisfactory to the Agent on historical
sale-through rates for the Fulfillment
Business Segment, and
(u) such other reports as to the
Collateral or the financial condition of
Loan Parties and their Subsidiaries, as
Agent may request.
54
In addition, each Borrower agrees to cooperate fully with Agent to facilitate
and implement a system of electronic collateral reporting in order to provide
electronic reporting of each of the items set forth above.
6.3. FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver
to Agent, with copies to each Lender:
(a) as soon as available, but in any event within 30
days (45 days in the case of a month that is the end of one of Parent's fiscal
quarters) after the end of each month during each of Parent's Fiscal Years,
(i) a company prepared balance sheet, income
statement, and statement of cash flow covering Parent's and its
Subsidiaries' operations during such period, on both a consolidated and
consolidating basis and by Business Segment,
(ii) a certificate signed by the chief financial
officer of Parent to the effect that:
(A) the financial statements delivered
hereunder have been prepared in accordance with GAAP (except
for the lack of footnotes and being subject to year-end audit
adjustments) and fairly present in all material respects the
financial condition of Parent and its Subsidiaries,
(B) the representations and warranties of
Loan Parties contained in this Agreement and the other Loan
Documents are true and correct in all material respects on and
as of the date of such certificate, as though made on and as
of such date (except to the extent that such representations
and warranties relate solely to an earlier date), and
(C) there does not exist any condition or
event that constitutes a Default or Event of Default (or, to
the extent of any non-compliance, describing such
non-compliance as to which he or she may have knowledge and
what action Borrowers have taken, are taking, or propose to
take with respect thereto),
(iii) for each month that is the date on which a
financial covenant in Section 7.18 is to be tested, a Compliance
Certificate demonstrating, in reasonable detail, compliance at the end
of such period with the applicable financial covenants contained in
Section 7.18, and
(iv) a general ledger reconciliation
(b) as soon as available, but in any event within 90
days after the end of each of Parent's Fiscal Years,
(i) financial statements of Parent and its
Subsidiaries for each such Fiscal Year, on both a consolidated and
consolidating basis and by Business Segment, audited by independent
certified public accountants reasonably acceptable to Agent (it being
understood that such audit may be performed and presented on a
consolidated basis
55
only) and certified, without any qualifications, by such accountants to
have been prepared in accordance with GAAP (such audited financial
statements to include a balance sheet, income statement, and statement
of cash flow and, if prepared, such accountants' letter to management),
and
(ii) a certificate of such accountants addressed
to Agent and the Lenders stating that such accountants do not have
knowledge of the existence of any Default or Event of Default under
Section 7.18,
(c) as soon as available, but in any event within 30
days prior to the start of each of Parent's Fiscal Years, copies of Loan
Parties' Projections, in form and substance (including as to scope and
underlying assumptions) satisfactory to Agent, in its sole discretion, for the
forthcoming 3 years, year by year, and for the forthcoming Fiscal Year, month by
month, on both a consolidated and consolidating basis and by Business Segment,
certified by the chief financial officer of Parent as being such officer's good
faith best estimate of the financial performance of Parent and its Subsidiaries
during the period covered thereby,
(d) if and when filed by any Loan Party,
(i) 10-Q quarterly reports, Form 10-K annual
reports, and Form 8-K current reports,
(ii) any other filings made by any Loan Party
with the SEC,
(iii) copies of Loan Parties' federal income tax
returns, and any amendments thereto, filed with the Internal Revenue
Service, and
(iv) any other information that is provided by
Parent to its shareholders generally,
(e) if and when filed by any Loan Party or any
Subsidiary of a Loan Party and as requested by Agent, satisfactory evidence of
payment of applicable excise taxes in each jurisdiction in which (i) any Loan
Party or any Subsidiary of a Loan Party conducts business or is required to pay
any such excise tax, (ii) where any Loan Party's or any Subsidiary of a Loan
Party's failure to pay any such applicable excise tax would result in a Lien on
the properties or assets of such Loan Party or such Subsidiary, or (iii) where
any Loan Party's or any Subsidiary of a Loan Party's failure to pay any such
applicable excise tax reasonably could be expected to result in a Material
Adverse Change,
(f) as soon as a Borrower has knowledge of any event
or condition that constitutes a Default or an Event of Default, notice thereof
and a statement of the curative action that Loan Parties propose to take with
respect thereto,
(g) promptly after the commencement thereof, but in
any event within 5 days after the service of process with respect thereto on any
Loan Party or any Subsidiary of a Loan Party, notice of all actions, suits, or
proceedings brought by or against any Loan Party or any Subsidiary of a Loan
Party before any Governmental Authority which, if determined
56
adversely to such Loan Party or such Subsidiary, reasonably could be expected to
result in a Material Adverse Change,
(h) (i) promptly and in any event (A) within 10 days
after any Loan Party or any ERISA Affiliate thereof knows or has reason to know
that any Termination Event described in clause (i) of the definition of
Termination Event with respect to any Benefit Plan has occurred, (B) within 10
days after any Loan Party or any ERISA Affiliate thereof knows or has reason to
know that any other Termination Event with respect to any Benefit Plan has
occurred, or (C) within 10 days after any Loan Party or any ERISA Affiliate
thereof knows or has reason to know that an accumulated funding deficiency has
been incurred or an application has been made to the Secretary of the Treasury
for a waiver or modification of the minimum funding standard (including
installment payments) or an extension of any amortization period under Section
412 of the IRC or the equivalent provision under any federal, state, local or
foreign counterparts or equivalents thereof with respect to a Benefit Plan, a
statement of an Authorized Person setting forth the details of such occurrence
and the action, if any, which such Loan Party or such ERISA Affiliate propose to
take with respect thereto, (ii) promptly and in any event within 3 days after
receipt thereof by any Loan Party or any ERISA Affiliate thereof from the PBGC,
copies of each notice received by any Loan Party or any ERISA Affiliate thereof
of the PBGC's intention to terminate any Plan or to have a trustee appointed to
administer any Plan, (iii) promptly and in any event within 10 days after the
filing thereof with the Internal Revenue Service if requested by Agent, copies
of each Schedule B (Actuarial Information) or the federal, state, local or
foreign equivalent thereof to the annual report (Form 5500 Series) or the
federal, state, local or foreign equivalent thereof with respect to each Benefit
Plan and Multiemployer Plan, (iv) promptly and in any event within 10 days after
any Loan Party or any ERISA Affiliate thereof knows or has reason to know that a
required installment within the meaning of Section 412 of the IRC or the
equivalent provision under any federal, state, local or foreign counterparts or
equivalents thereof has not been made when due with respect to a Benefit Plan,
(v) promptly and in any event within 3 days after receipt thereof by any Loan
Party or any ERISA Affiliate thereof from a sponsor of a Multiemployer Plan or
from the PBGC, a copy of each notice received by any Loan Party or any ERISA
Affiliate thereof concerning the imposition or amount of withdrawal liability
under Section 4202 of ERISA or the equivalent provision under any federal,
state, local or foreign counterparts or equivalents thereof or indicating that
such Multiemployer Plan may enter reorganization status under Section 4241 of
ERISA or the equivalent provision under any federal, state, local or foreign
counterparts or equivalents thereof, and (vi) promptly and in any event within
10 days after any Loan Party or any ERISA Affiliate thereof send notice of a
plant closing or mass layoff (as defined in the Worker Adjustment and Retraining
Notification Act) to employees, copies of each such notice sent by any Loan
Party or any ERISA Affiliate thereof,
(i) immediately upon obtaining knowledge thereof,
notice of the termination of any customer contract or any Material Contract or
any material changes in the terms of any such contract or any Material Contract,
provided that, in the case of customer contracts that are not Material
Contracts, this Section 6.3(i) shall not apply to the extent that (i) any such
contract both (A) generated gross revenue of less than $250,000 for the most
recently completed Fiscal Year of the Parent and (B) has a remaining term of
more than one year or (ii) any such contract both (A) generated gross revenue of
less than $500,000 for the most recently completed Fiscal Year of the Parent and
(B) has a remaining term of less than one year,
57
(j) concurrently with delivery to or receipt from the
Revolver Agent or any Revolver Lender, a copy of each notice, demand, report,
statement or other document delivered to or received from the Revolver Agent or
any Revolver Lender (unless otherwise required to be delivered hereunder), and
(k) upon the request of Agent, any other report
reasonably requested relating to the financial condition of Loan Parties or
their Subsidiaries.
In addition to the financial statements referred to above, Loan Parties agree to
deliver financial statements prepared on both a consolidated and consolidating
basis and agree that no Subsidiary of Parent will have a Fiscal Year different
from that of Parent, provided that each of IPD, Huck NC and Huck Xxxxxx xxx have
the Fiscal Year specified in the definition of such term. Loan Parties agree to
cooperate with Agent to allow Agent to consult with their independent certified
public accountants if Agent reasonably requests the right to do so and that, in
such connection, their independent certified public accountants are authorized
to communicate with Agent and to release to Agent whatever financial information
concerning Loan Parties or their Subsidiaries that Agent reasonably may request.
6.4. GUARANTOR REPORTS. Cause each Guarantor to deliver
its annual financial statements at the time when Parent provides its audited
financial statements to Agent, but only to the extent such Guarantor's financial
statements are not consolidated with Parent's financial statements, and copies
of all federal income tax returns as soon as the same are available and in any
event no later than 30 days after the same are required to be filed by law.
6.5. RETURNS. Cause returns and allowances as between Loan
Parties and their Subsidiaries and their Account Debtors, to be on the same
basis and in accordance with the usual customary practices of Loan Parties and
their Subsidiaries, as they exist at the time of the execution and delivery of
this Agreement.
6.6. MAINTENANCE OF PROPERTIES. Maintain and preserve all
of their properties which are necessary or useful in the proper conduct to their
business in good working order and condition, ordinary wear and tear excepted,
and comply at all times with the provisions of all leases to which it is a party
as lessee, so as to prevent any loss or forfeiture thereof or thereunder.
6.7. TAXES. Cause all assessments and taxes, whether real,
personal, or otherwise, due or payable by, or imposed, levied, or assessed
against Loan Parties, their Subsidiaries, or any of their respective assets to
be paid in full, before delinquency or before the expiration of any extension
period, except to the extent that (i) the validity of such assessment or tax
shall be the subject of a Permitted Protest or (ii) the aggregate amount payable
for all such assessments and taxes does not exceed $100,000. Loan Parties will
and will cause their Subsidiaries to make timely payment or deposit of all tax
payments and withholding taxes required of them by applicable laws, including
those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state,
provincial and federal income taxes including, without limitation, the Canadian
Income Tax Act, and will, upon request, furnish Agent with proof satisfactory to
Agent indicating that the applicable Loan Party or Subsidiary of a Loan Party
has made such payments or deposits.
58
6.8. INSURANCE.
(a) At Loan Parties' expense, maintain insurance
respecting their and their Subsidiaries' assets wherever located, covering loss
or damage by fire, theft, explosion, and all other hazards and risks as
ordinarily are insured against by other Persons engaged in the same or similar
businesses. Loan Parties also shall maintain business interruption, public
liability, and product liability insurance, as well as insurance against
larceny, embezzlement, and criminal misappropriation. All such policies of
insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Loan Parties shall deliver copies of all such
policies to Agent with a satisfactory lender's loss payable endorsement naming
Agent as sole loss payee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever.
(b) Administrative Borrower shall give Collateral
Agent prompt notice of any loss covered by such insurance. Collateral Agent
shall have the exclusive right to adjust any losses claimed under any such
insurance policies in excess of $100,000 (or in any amount after the occurrence
and during the continuation of an Event of Default), without any liability to
Loan Parties whatsoever in respect of such adjustments. Any monies received as
payment for any loss under any insurance policy mentioned above (other than
liability insurance policies) or as payment of any award or compensation for
condemnation or taking by eminent domain, shall be paid over to Collateral Agent
to be applied at the option of the Required Lenders either to the prepayment of
the Obligations or shall be disbursed to Administrative Borrower under staged
payment terms reasonably satisfactory to the Required Lenders for application to
the cost of repairs, replacements, or restorations. Any such repairs,
replacements, or restorations shall be effected with reasonable promptness and
shall be of a value at least equal to the value of the items or property
destroyed prior to such damage or destruction.
(c) Loan Parties shall not, and shall not suffer or
permit their Subsidiaries to, take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
Section 6.8, unless Collateral Agent is included thereon as named insured with
the loss payable to Collateral Agent under a lender's loss payable endorsement
or its equivalent. Administrative Borrower immediately shall notify Collateral
Agent whenever such separate insurance is taken out, specifying the insurer
thereunder and full particulars as to the policies evidencing the same, and
copies of such policies promptly shall be provided to Collateral Agent.
(d) At Borrowers' expense, maintain key man life
insurance policies with respect to the following individuals and in the
following amounts:
Name Amount
---- ------
S. Xxxxxx Xxxxxx $1,000,000
Xxx Xxxxxx $1,000,000
59
Borrowers shall furnish Collateral Agent with an "Absolute Assignment" of each
such key man life insurance policy, shall record each such "Absolute Assignment"
with the issuer of the respective policy, and shall furnish proof of such
issuer's acceptance of such assignment. All proceeds payable under such key man
life insurance policies shall be payable to Collateral Agent to be applied on
account of the Obligations in accordance with Section 2.4(b).
6.9. LOCATION OF INVENTORY AND EQUIPMENT. Keep Loan
Parties' and their Subsidiaries' Inventory and Equipment only at the locations
identified on Schedule 5.5 and their chief executive offices only at the
locations identified on Schedule 5.7(b); provided, however, that Administrative
Borrower may amend Schedule 5.5 and Schedule 5.7 so long as such amendment
occurs by written notice to Agent not less than 30 days prior to the date on
which such Inventory or Equipment is moved to such new location or such chief
executive office is relocated, so long as such new location is within the
continental United States, and so long as, at the time of such written
notification, the applicable Loan Party provides Collateral Agent a Collateral
Access Agreement for each Leased Real Property used in the manufacturing,
warehousing and distribution operations of the Loan Parties.
6.10. COMPLIANCE WITH LAWS. Comply with the requirements of
all applicable laws, rules, regulations, and orders of any Governmental
Authority, including the Fair Labor Standards Act and the Americans With
Disabilities Act, other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Change.
6.11. LEASES. Pay when due all rents and other amounts
payable under any leases to which any Loan Party or any Subsidiary of a Loan
Party is a party or by which any Loan Party's or any Subsidiary of a Loan
Party's properties and assets are bound, unless (a) such payments are the
subject of a Permitted Protest or (b) such location is not the corporate
headquarters of the Loan Parties or a location where any books or records with
respect to Collateral or any Collateral with a fair market value of more than
$200,000 is located and the failure to make such payment could not reasonably be
expected to result in a Material Adverse Change.
6.12. EXISTENCE. At all times preserve and keep in full
force and effect each Loan Party's and each Subsidiary of a Loan Party's valid
existence and good standing and any rights and franchises material to their
businesses, except as otherwise permitted under Section 7.3.
6.13. ENVIRONMENTAL.
(a) (i) Keep any property either owned or operated by
any Loan Party or any Subsidiary of a Loan Party free of any Environmental Liens
or post bonds or other financial assurances sufficient to satisfy the
obligations or liability evidenced by such Environmental Liens, (ii) comply, in
all material respects, with Environmental Laws and provide to Agent
documentation of such compliance which Agent reasonably requests, (iii) promptly
notify Agent of any release of a Hazardous Material of any reportable quantity
from or onto property owned or operated by any Loan Party or any Subsidiary of a
Loan Party and take and complete any Remedial Actions required to xxxxx said
release or otherwise to come into compliance with
60
applicable Environmental Law, and permit Collateral Agent (at the direction of
Agent) to participate in the resolution thereof if so requested by Collateral
Agent, in accordance with subsection (b) below, (iv) promptly, but in any event
within 5 days of its receipt thereof, provide Agent with written notice of any
of the following: (A) notice that an Environmental Lien has been filed against
any of the real or personal property of any Loan Party or any Subsidiary of a
Loan Party, (B) commencement of any Environmental Action or notice that an
Environmental Action will be filed against any Loan Party or any Subsidiary of a
Loan Party, and (C) notice of a violation, citation, or other administrative
order which reasonably could be expected to result in a Material Adverse Change.
(b) Collateral Agent may join and participate in, as
a party if the Collateral Agent so determines, any legal or administrative
proceeding or action concerning the Real Property or any portion thereof under
any Environmental Law, if, in the Agent's reasonable judgment, the interests of
the Lenders shall not be adequately protected by Borrowers; provided, however,
that the Collateral Agent shall not participate in day-to-day decision making
with respect to environmental compliance. Borrowers shall pay or reimburse Agent
and/or Collateral Agent on demand for all reasonable sums advanced and
reasonable expenses incurred (including reasonable attorneys' fees and
disbursements but excluding internal overhead, administrative and similar costs
of the Lenders) by the Lenders in connection with any such action or proceeding.
(c) Upon reasonable prior written notice and at the
direction of Agent, the Collateral Agent shall have the right, except as
otherwise provided under Leases, at all reasonable times during normal business
hours to enter upon and inspect all or any portion of the Real Property,
provided that such inspections shall not unreasonably interfere with the
operation or the tenants, residents or occupants of the Real Property. The
inspection rights granted to the Collateral Agent in this subsection shall be in
addition to, and not in limitation of, any other inspection rights granted to
the Agent in this Agreement, and shall expressly include the right (if the Agent
reasonably suspects that Remedial Action may be required) to conduct soil
borings, establish ground water monitoring xxxxx and conduct other customary
environmental test, assessments and audits.
6.14. DISCLOSURE UPDATES. Promptly and in no event later
than 5 Business Days after obtaining knowledge thereof, notify Agent if any
written information, exhibit, or report furnished to the Lender Group contained
any untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made. The foregoing to the contrary notwithstanding,
any notification pursuant to the foregoing provision will not cure or remedy the
effect of the prior untrue statement of a material fact or omission of any
material fact nor shall any such notification have the affect of amending or
modifying this Agreement or any of the Schedules hereto.
6.15. FORMATION OF SUBSIDIARIES. At the time that any
Borrower or any Guarantor forms any direct or indirect Subsidiary or acquires
any direct or indirect Subsidiary after the Closing Date, such Borrower or such
Guarantor shall (a) cause such new Subsidiary to provide to Agent a joinder to
this Agreement and a Security Agreement, together with such other guaranty and
security documents (including Mortgages with respect to any Real Property of
such new Subsidiary), as well as appropriate UCC-1 financing statements and PPSA
registration
61
statements (and with respect to all property subject to a Mortgage, fixture
filings), all in form and substance satisfactory to Agent (including being
sufficient to grant Collateral Agent a first priority Lien (subject to Permitted
Liens) in and to the assets of such newly formed or acquired Subsidiary), (b)
provide to Collateral Agent a pledge agreement and appropriate certificates and
powers or UCC-1 financing statements or PPSA registration statements,
hypothecating all of the direct or beneficial ownership interest in such new
Subsidiary, in form and substance satisfactory to Agent, and (c) provide to
Agent all other documentation, including one or more opinions of counsel
satisfactory to Agent, which in its opinion is appropriate with respect to the
execution and delivery of the applicable documentation referred to above
(including policies of title insurance or other documentation with respect to
all property subject to a Mortgage). Any document, agreement, or instrument
executed or issued pursuant to this Section 6.15 shall be a Loan Document.
6.16. PROGRAM CONTRACTS.
(a) On and after the Closing Date, when entering into
agreements with its customers for the programs described in clause (i) of the
definition of "Program Contracts", utilize Program Contracts that contain the
security interest language specified in Exhibit P-1, with such changes as are
acceptable to Agent, provided that it shall not be a breach of this Section
6.16(a) if contracts generating net revenues in an aggregate amount not
exceeding $500,000 in any Fiscal Year do not contain the security interest
language specified in Exhibit P-1 or other language acceptable to Agent.
(b) On and after the Closing Date, when entering into
agreements with its customers for the programs described in clause (ii) of the
definition of "Program Contracts", utilize Program Contracts that contain the
xxxx and hold language specified in Exhibit P-1, with such changes as are
acceptable to Agent, provided that it shall not be a breach of this Section
6.16(b) if contracts generating net revenues in an aggregate amount not
exceeding $500,000 in any Fiscal Year do not contain the xxxx and hold language
specified in Exhibit P-1 or other language acceptable to Agent.
6.17. UNIVERSAL CIRCULATION. Not later than 90 days
following the Closing Date, Borrowers shall (i) cause Universal Circulation
Services Inc. to be merged with and into another Loan Party or dissolved and
wound up and (ii) deliver to Agent evidence satisfactory to the Agent that such
requirement has been timely satisfied.
6.18. SEARCH REPORT. Not later than 30 days following the
Closing Date, Borrowers shall cause to be delivered to Agent a UCC search from
the Secretary of State of California with respect to Primary News Company, Inc.
which reflects that the UCC-1 naming Imperial Bank as secured party filed on
October 22, 1998 as file 9830260699 has been terminated or has lapsed without
being continued.
6.19. EXPENSE DEPOSIT. If at any time Borrowers' Excess
Availability shall be less than $2,500,000, Borrowers shall promptly, but in any
event within five Business Days, pay to Agent an expense deposit in the amount
of $25,000 (the "Expense Deposit"), which Expense Deposit shall be held by Agent
and may be applied by the Agent to the Lender Group Expenses incurred by the
Agent in connection with the exercise of any of its rights under this Agreement,
62
including, without limitation, monitoring Borrowers' compliance with the terms
of this Agreement and the other Loan Documents and any appraisals, audits,
collateral reviews and field examinations conducted by the Agent during the term
of this Agreement. To the extent that the Agent applies any portion of the
Expense Deposit to pay any Lender Group Expenses, Borrowers shall deposit with
the Agent within ten (10) days after demand by the Agent the amount so applied
so that the Expense Deposit is not less than $25,000 after such new deposit. In
no event shall prior recourse to the Expense Deposit be a prerequisite to the
Agent's right to demand reimbursement for any Lender Group Expenses. The Expense
Deposit will not be segregated and may be commingled with other funds of the
Agent and Borrowers will not be entitled to receive any interest on the Expense
Deposit. The unused portion of the Expense Deposit shall be returned to
Administrative Borrower upon the earlier of the Maturity Date or the payment in
full in cash of all of the Obligations.
7. NEGATIVE COVENANTS. Each Loan Party covenants and agrees that,
until the payment in full of the Obligations and the termination of this
Agreement, such Loan Party will not and will not permit any of its Subsidiaries
to do any of the following:
7.1. INDEBTEDNESS. Create, incur, assume, suffer to exist,
guarantee, or otherwise become or remain, directly or indirectly, liable with
respect to any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the
other Loan Documents;
(b) Indebtedness set forth on Schedule 5.20;
(c) Permitted Purchase Money Indebtedness;
(d) refinancings, renewals, or extensions of
Indebtedness permitted under clauses (b) and (c) of this Section 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so long as:
(i) the terms and conditions of such refinancings, renewals, or extensions do
not, in Agent's judgment, materially impair the prospects of repayment of the
Obligations by Loan Parties or materially impair Loan Parties' creditworthiness,
(ii) such refinancings, renewals, or extensions do not result in an increase in
the then extant principal amount of, or interest rate with respect to, the
Indebtedness so refinanced, renewed, or extended or add one or more Loan Parties
as liable with respect thereto if such additional Loan Parties were not liable
with respect to the original Indebtedness, (iii) such refinancings, renewals, or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions, that, taken as a whole, are materially more burdensome or
restrictive to the applicable Loan Party, (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment or in lien
priority to the Obligations, then the terms and conditions of the refinancing,
renewal, or extension Indebtedness must be include subordination terms and
conditions that are at least as favorable to the Lender Group as those that were
applicable to the refinanced, renewed, or extended Indebtedness, and (v) the
Indebtedness that is refinanced, renewed, or extended is not recourse to any
Person that is liable on account of the Obligations other than those Persons
which were obligated with respect to the Indebtedness that was refinanced,
renewed, or extended;
63
(e) endorsement of instruments or other payment items
for deposit; and
(f) Indebtedness composing Permitted Investments;
(g) Indebtedness under the Revolver Loan Agreement in
an aggregate principal amount not to exceed $50,000,000, less any portion of the
loans under the Revolver Loan Agreement which have been permanently repaid,
whether at scheduled maturity, required or voluntary prepayment or otherwise;
(h) Subordinated Indebtedness; and
(i) other unsecured Indebtedness in an aggregate
principal amount outstanding at any time not to exceed $500,000.
7.2. LIENS. Create, incur, assume, or suffer to exist,
directly or indirectly, any Lien on or with respect to any of its assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced,
renewed, or extended under Section 7.1(d) and so long as the replacement Liens
only encumber those assets that secured the refinanced, renewed, or extended
Indebtedness).
7.3. RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation,
reorganization, or recapitalization, or reclassify its Stock except (i) for a
Permitted Acquisition and (ii) so long as no Default or Event of Default shall
have occurred and be continuing or would result therefrom, upon the not less
than 30 days prior written notice to Agent, the merger or consolidation of any
Guarantor with or into another Loan Party, or of any Borrower (other than
Parent, IPD or US Marketing Services) with or into another Borrower.
(b) Liquidate, wind up, or dissolve itself (or suffer
any liquidation or dissolution), provided that, so long as no Default or Event
of Default shall have occurred and be continuing or would result therefrom, upon
not less than 30 days prior written notice to Agent, any Borrower (other than
Parent, IPD or US Marketing Services) and any Guarantor may dissolve itself so
long as all of its assets are transferred to a Borrower (if the dissolving
entity is a Borrower) or a Guarantor, in each case subject to the Lien of the
Collateral Agent.
(c) Convey, sell, lease, license, assign, transfer,
or otherwise dispose of, in one transaction or a series of transactions, all or
any substantial part of its assets.
7.4. DISPOSAL OF ASSETS. Other than Permitted
Dispositions, convey, sell, lease, license, assign, transfer, or otherwise
dispose of any of the assets of any Loan Party or any Subsidiary of a Loan
Party, provided that, so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom, upon not less than 30 days
prior written notice to Agent, the Loan Parties may sell all or substantially
all of the assets or Stock of DEYCO pursuant to the terms of the DEYCO Letter of
Intent for a purchase price payable in cash (the "DEYCO Sale"), provided further
that the Net Cash Proceeds of the DEYCO Sale are paid to Collateral Agent and
applied in accordance with Section 2.4(c)(i).
64
7.5. CHANGE NAME. Change any Loan Party's or any
Subsidiary of a Loan Party's name, FEIN, organizational identification number,
state of organization, or organizational identity; provided, however, that a
Loan Party or a Subsidiary of a Loan Party may change its name upon at least 30
days prior written notice by Administrative Borrower to Agent of such change and
so long as, at the time of such written notification, such Loan Party or such
Subsidiary provides any financing statements necessary to perfect and continue
perfected Collateral Agent's Liens.
7.6. NATURE OF BUSINESS. Make any change in the principal
nature of their business.
7.7. PREPAYMENTS AND AMENDMENTS. Except in connection with
a refinancing permitted by Section 7.1(d),
(a) prepay, redeem, defease, purchase, or otherwise
acquire any Indebtedness of any Loan Party or any Subsidiary of a Loan Party,
other than (i) the Obligations in accordance with this Agreement and (ii) the
Indebtedness permitted by Section 7.1(g),
(b) prepay, redeem, defease, purchase, or otherwise
acquire any Indebtedness of any Loan Party or any subsidiary of a Loan Party
(other than pursuant to the Revolver Loan Agreement), other than the Obligations
in accordance with this Agreement, provided that the Loan Parties may prepay in
full the Myco IRB in an aggregate amount not to exceed $4,277,672, so long as
(i) the letter of credit issued pursuant to the Revolver Loan Agreement on the
Closing Date in the amount of $4,277,671.65, naming Bank of America, N.A. as
beneficiary, and issued for the purpose of securing letter of credit no. 3022930
dated February 8, 2000, issued by Bank of America, N.A. in connection with the
Myco IRB, or (ii) any letter of credit issued in replacement of the letter of
credit described in clause (i), shall be returned for cancellation, on terms and
conditions acceptable to Agent, in connection with such payment, or
(c) directly or indirectly, amend, modify, alter,
increase, or change any of the terms or conditions of any agreement, instrument,
document, indenture, or other writing evidencing or concerning Indebtedness
permitted under Section 7.1(b) or (c).
7.8. CHANGE OF CONTROL. Cause, permit, or suffer, directly
or indirectly, any Change of Control.
7.9. CONSIGNMENTS. Other than for the Fulfillment Business
Segments, consign any of their Inventory or sell any of their Inventory on xxxx
and hold, sale or return, sale on approval, or other conditional terms of sale,
provided that xxxx and hold sales may be made in compliance with Section
6.16(b).
7.10. DISTRIBUTIONS. Other than distributions or
declaration and payment of dividends by a Loan Party to another Loan Party, make
any distribution or declare or pay any dividends (in cash or other property,
other than common Stock) on, or purchase, acquire, redeem, or retire any of any
Loan Party's Stock, of any class, whether now or hereafter outstanding.
7.11. ACCOUNTING METHODS. Modify or change their Fiscal
Year or their method of accounting (other than as may be required to conform to
GAAP) or enter into, modify,
65
or terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Loan Parties' or their Subsidiaries' accounting records without
said accounting firm or service bureau agreeing to provide Agent information
regarding Loan Parties' and their Subsidiaries' financial condition.
7.12. INVESTMENTS. Except for Permitted Investments and
Permitted Acquisitions, directly or indirectly, enter into any Acquisition, or
make or acquire any Investment, or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
Administrative Borrower and its Subsidiaries shall not have Permitted
Investments (other than in the Cash Management Accounts) in Deposit Accounts or
Securities Accounts in an aggregate amount in excess of $50,000 outstanding at
any one time unless Administrative Borrower or its Subsidiary, as applicable,
and the applicable securities intermediary or bank have entered into Control
Agreements or similar arrangements governing such Permitted Investments in order
to perfect (and further establish) the Collateral Agent's Liens in such
Permitted Investments. Subject to the foregoing proviso, Loan Parties shall not,
and shall not permit their Subsidiaries to, establish or maintain any Deposit
Account or Securities Account unless Agent shall have received a Control
Agreement in respect of such Deposit Account or Securities Account.
7.13. TRANSACTIONS WITH AFFILIATES. Directly or indirectly
enter into or permit to exist any transaction with any Affiliate of any Loan
Party except for transactions that are in the ordinary course of Loan Parties'
business, upon fair and reasonable terms, that are fully disclosed to Agent, and
that are no less favorable to Loan Parties than would be obtained in an arm's
length transaction with a non-Affiliate.
7.14. SUSPENSION. Suspend or go out of a substantial portion
of their business, other than in connection with a sale or other disposition
permitted under Section 7.4 or a transaction described in and permitted by
Section 7.3.
7.15. [INTENTIONALLY OMITTED].
7.16. USE OF PROCEEDS. Use the proceeds of the Term Loan for
any purpose other than (a) on the Closing Date, (i) to repay in full the
outstanding principal, accrued interest, and accrued fees and expenses owing to
Existing Lenders, and (ii) to pay transactional fees, costs, and expenses
incurred in connection with this Agreement, the other Loan Documents, and the
transactions contemplated hereby and thereby, and (b) thereafter, consistent
with the terms and conditions hereof, for its lawful and permitted purposes.
7.17. EQUIPMENT WITH BAILEES. Store the Equipment of Loan
Parties or their Subsidiaries at any time now or hereafter with a bailee,
warehouseman, or similar party without Agent's prior written consent.
66
7.18. FINANCIAL COVENANTS.
(a) Fail to maintain or achieve:
(i) MINIMUM EBITDA. EBITDA, measured on a
month-end basis for the applicable period set forth below of at least
the applicable amount set forth below opposite such period:
--------------------------------------------------------------------------------
Applicable Period Applicable Amount
--------------------------------------------------------------------------------
For the three months ended 10/31/03 $ 5,700,000
-----------------------------------------------------------------------------
For the four months ended 11/30/03 $ 6,725,000
-----------------------------------------------------------------------------
For the five months ended 12/31/03 $ 7,450,000
-----------------------------------------------------------------------------
For the six months ended 1/31/04 $ 9,720,000
-----------------------------------------------------------------------------
For the seven months ended 2/28/04 $10,860,000
-----------------------------------------------------------------------------
For the eight months ended 3/31/04 $12,000,000
-----------------------------------------------------------------------------
For the nine months ended 4/30/04 $14,055,000
-----------------------------------------------------------------------------
For the ten months ended 5/31/04 $16,585,000
-----------------------------------------------------------------------------
For the eleven months ended 6/30/04 $17,120,000
-----------------------------------------------------------------------------
For the twelve months ended 7/31/04 $19,625,000
-----------------------------------------------------------------------------
For the twelve months ended 8/31/04 $20,130,000
-----------------------------------------------------------------------------
For the twelve months ended 9/30/04 $20,635,000
-----------------------------------------------------------------------------
For the twelve months ended 10/31/04 $20,410,000
-----------------------------------------------------------------------------
For the twelve months ended 11/30/04 $21,165,000
-----------------------------------------------------------------------------
For the twelve months ended 12/31/04 $22,215,000
-----------------------------------------------------------------------------
For the twelve months ended 1/31/05 $22,495,000
-----------------------------------------------------------------------------
For the twelve months ended 2/28/05 $22,835,000
-----------------------------------------------------------------------------
For the twelve months ended 3/31/05 and $23,000,000
for each twelve month period thereafter
-----------------------------------------------------------------------------
(ii) FIXED CHARGE COVERAGE RATIO. A Fixed Charge
Coverage Ratio, measured on a month-end basis for the applicable period
set forth below, of at least the required amount set forth below
opposite such period:
67
------------------------------------------------------------------------
Applicable Period Applicable Ratio
------------------------------------------------------------------------
For the three months ended 10/31/03 4.0 to 1.0
----------------------------------------------------------------------
For the four months ended 11/30/03 3.3 to 1.0
----------------------------------------------------------------------
For the five months ended 12/31/03 2.8 to 1.0
----------------------------------------------------------------------
For the six months ended 1/31/04 2.9 to 1.0
----------------------------------------------------------------------
For the seven months ended 2/28/04 2.7 to 1.0
----------------------------------------------------------------------
For the eight months ended 3/31/04 2.6 to 1.0
----------------------------------------------------------------------
For the nine months ended 4/30/04 2.7 to 1.0
----------------------------------------------------------------------
For the ten months ended 5/31/04 2.1 to 1.0
----------------------------------------------------------------------
For the eleven months ended 6/30/04 2.0 to 1.0
----------------------------------------------------------------------
For the twelve months ended 7/31/04 2.1 to 1.0
----------------------------------------------------------------------
For the twelve months ended 8/31/04 2.1 to 1.0
----------------------------------------------------------------------
For the twelve months ended 9/30/04 2.2 to 1.0
----------------------------------------------------------------------
For the twelve months ended 10/31/04 2.1 to 1.0
----------------------------------------------------------------------
For the twelve months ended 11/30/04 2.1 to 1.0
----------------------------------------------------------------------
For the twelve months ended 12/31/04 2.2 to 1.0
----------------------------------------------------------------------
For the twelve months ended 1/31/05 2.3 to 1.0
----------------------------------------------------------------------
For the twelve months ended 2/28/05 2.3 to 1.0
----------------------------------------------------------------------
For the twelve months ended 3/31/05 2.3 to 1.0
----------------------------------------------------------------------
For the twelve months ended 4/30/05 2.3 to 1.0
----------------------------------------------------------------------
For the twelve months ended 5/31/05 2.3 to 1.0
----------------------------------------------------------------------
For the twelve months ended 6/30/05 2.4 to 1.0
----------------------------------------------------------------------
For the twelve months ended 7/31/05 2.4 to 1.0
----------------------------------------------------------------------
For the twelve months ended 8/31/05 2.4 to 1.0
----------------------------------------------------------------------
For the twelve months ended 9/30/05 2.5 to 1.0
----------------------------------------------------------------------
For the twelve months ended 10/31/05 and 2.5 to 1.0
each twelve month period thereafter
----------------------------------------------------------------------
(b) Permit:
(i) SENIOR DEBT RATIO. The Senior Debt Ratio at
any time during the applicable period set forth below to exceed the
applicable ratio set forth below opposite such period:
68
------------------------------------------------------------------------
Applicable Period Applicable Ratio
------------------------------------------------------------------------
At any time on and after November 30,
2003 to May 31, 2004 3.25 to 1.0
----------------------------------------------------------------------
At any time after May 31, 2004 to
November 30, 2004 3.0 to 1.0
----------------------------------------------------------------------
At any time on or after November 30,
2004 2.7 to 1.0
----------------------------------------------------------------------
(c) Make:
(i) CAPITAL EXPENDITURES. Capital Expenditures
(excluding expenditures made with respect to Permitted Acquisitions) in
any Fiscal Year in excess of the amount set forth in the following
table for the applicable period:
------------------------------------------------------------------------
Fiscal Year 2004 Fiscal Year 2005 Fiscal Year 2006 and each
Fiscal Year thereafter
------------------------------------------------------------------------
$1,500,000 $2,800,000 $3,400,000
------------------------------------------------------------------------
7.19. REVOLVER LOAN AGREEMENT. The Borrowers shall not:
(i) to the extent prohibited by the
Intercreditor and Collateral Agency Agreement, effect or permit any
amendment or modification to the Revolver Loan Agreement or any of the
Revolver Loan Documents without the prior written consent of Agent; or
(ii) furnish any collateral security to
Collateral Agent or Revolver Agent on account of Indebtedness due under
the Revolver Loan Agreement other than property which also secures the
Obligations and which is the subject to Intercreditor and Collateral
Agency Agreement; or
(iii) to the extent prohibited by the
Intercreditor and Collateral Agency Agreement, permit the sum of (A)
the aggregate outstanding principal amount of all revolving credit
loans made to the Borrowers under the Revolver Loan Agreement and (B)
the undrawn stated amount of all letters of credit issued for the
account of any Borrower under the Revolver Loan Agreement to exceed the
lesser of (x) $45,000,000 and (y) the difference between (1) the
Borrowing Base plus the Permitted Overadvance (as defined in the
Intercreditor and Collateral Agency Agreement) and (2) any
69
Availability Reserves (any such excess, an "Excess Borrowing");
provided that if any Excess Borrowing exists, Borrowers shall
immediately take the following actions in the following order until
such Excess Borrowing is reduced to zero:
(x) prepay the revolving loans
outstanding under the Revolver Loan Agreement in the amount of
such Excess Borrowing; and
(y) cash collateralize the undrawn
amount of the letters of credit outstanding under the Revolver
Loan Agreement in the amount of such Excess Borrowing.
7.20. BUSINESS SEGMENTS. Make any changes with respect to the
Business Segments of the Loan Parties, and the identities of the Subsidiaries
included in each such Business Segment, from the structure set forth in Schedule
S-1.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement:
8.1. If Loan Parties fail to pay when due and payable or
when declared due and payable, all or any portion of the Obligations (whether of
principal, interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due the
Lender Group, reimbursement of Lender Group Expenses, or other amounts
constituting Obligations);
8.2. If any Loan Party:
(a) fails to perform, keep, or observe any term,
provision, covenant, or agreement contained in Sections 2.7, 3.2, 6.7, 6.8,
6.10, 6.12, 6.15, 6.16 and 7.1 through 7.20 of this Agreement;
(b) fails or neglects to perform, keep, or
observe any term, provision, covenant, or agreement contained in 6.2, 6.3, 6.5,
6.6, 6.9, 6.11, and 6.14 of this Agreement and such failure continues for a
period of 5 Business Days; or
(c) fails or neglects to perform, keep, or
observe any other term, provision, covenant, or agreement contained in this
Agreement, or in any of the other Loan Documents (giving effect to any grace
periods, cure periods, or required notices, if any, expressly provided for in
such Loan Documents); in each case, other than any such term, provision,
covenant, or agreement that is the subject of another provision of this Section
8 (in which event such other provision of this Section 8 shall govern), and such
failure continues for a period of 10 Business Days;
8.3. If any material portion of any Loan Party's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any third Person;
70
8.4. If an Insolvency Proceeding is commenced by any Loan
Party or any Subsidiary of a Loan Party;
8.5. If an Insolvency Proceeding is commenced against any
Loan Party or any Subsidiary of a Loan Party, and any of the following events
occur: (a) the applicable Loan Party or Subsidiary consents to the institution
of the Insolvency Proceeding against it, (b) the petition commencing the
Insolvency Proceeding is not timely controverted; provided, however, that,
during the pendency of such period, each member of the Lender Group shall be
relieved of its obligations to extend credit hereunder, (c) the petition
commencing the Insolvency Proceeding is not dismissed within 45 calendar days of
the date of the filing thereof; provided, however, that, during the pendency of
such period, each member of the Lender Group shall be relieved of its obligation
to extend credit hereunder, (d) an interim trustee is appointed to take
possession of all or any substantial portion of the properties or assets of, or
to operate all or any substantial portion of the business of, any Loan Party or
any Subsidiary of a Loan Party, or (e) an order for relief shall have been
entered therein;
8.6. If any Loan Party or any Subsidiary of a Loan Party
is enjoined, restrained, or in any way prevented by court order from continuing
to conduct all or any material part of its business affairs;
8.7. (a) If a notice of Lien is filed of record with
respect to a Loan Party's assets or any of its Subsidiaries' assets by the
United States, Canada or any department, agency, or instrumentality thereof (a
"Federal Lien"), or by any state, province, territory, county, municipal, or
governmental agency and such state, county, municipal, or governmental agency
Lien has priority over the Liens of the Collateral Agent in and to the
Collateral or any portion thereof (a "Non-Federal Priority Lien"); or
(b) If a notice of Lien is filed of record with
respect to a Loan Party' assets or any of its Subsidiaries' assets by any state,
county, municipal, or governmental agency that is not a Non-Federal Priority
Lien (a "Non-Federal Non-Priority Lien"); provided, however, that, if the
aggregate amount claimed with respect to any such Non-Federal Non-Priority
Liens, or combination thereof, is less than $100,000, an Event of Default shall
not occur under this subsection if the claims that are the subject of such Liens
are the subject of Permitted Protests and if the Liens are released, discharged,
or bonded against within 30 days of each such Lien first being filed of record
or, if earlier, at least 5 days prior to the date on which assets that are
subject to such Liens are subject to being sold or forfeited and, in any such
case, Agent shall have the absolute right to establish and maintain an
Availability Reserve against the Borrowing Base and the Maximum Revolver Loan
Agreement Amount in an amount equal to the aggregate amount of the underlying
claims (determined by Agent, in its Permitted Discretion, and irrespective of
any Permitted Protests with respect thereto and including any penalties or
interest that are estimated by Agent, in its Permitted Discretion, to arise in
connection therewith);
8.8. If a judgment or other claim becomes a Lien or
encumbrance upon any material portion of any Loan Party's or any Subsidiary of a
Loan Party's properties or assets;
8.9. (i) If a Revolver Event of Default shall occur, or
(ii) if there is a default in any other material agreement to which any Loan
Party or any Subsidiary of a Loan Party is a
71
party and, in the case of this clause (ii), such default (a) occurs at the final
maturity of the obligations thereunder, or (b) results in a right by the other
party thereto, irrespective of whether exercised, to accelerate the maturity of
the applicable Loan Party's or Subsidiary's obligations thereunder, or to
terminate such agreement;
8.10. If any Loan Party or any Subsidiary of a Loan Party
makes any payment on account of Indebtedness that has been contractually
subordinated in right of payment to the payment of the Obligations, except to
the extent such payment is permitted by the terms of the subordination
provisions applicable to such Indebtedness;
8.11. If any material misstatement or misrepresentation
exists now or hereafter in any warranty, representation, statement, or Record
made to the Lender Group by any Loan Party, any Subsidiary of a Loan Party, or
any officer, employee, agent, or director of any Loan Party or any Subsidiary of
a Loan Party;
8.12. If the obligation of any Guarantor under any Guaranty
is limited or terminated by operation of law or by such Guarantor thereunder
except in connection with a transaction permitted under Section 7.3;
8.13. If this Agreement or any other Loan Document that
purports to create a Lien, shall, for any reason, fail or cease to create a
valid and perfected and, except to the extent permitted by the terms hereof or
thereof, first priority Lien on or security interest in the Collateral covered
hereby or thereby;
8.14. Any provision of any Loan Document shall at any time
for any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Loan Party or any Subsidiary of
a Loan Party, or a proceeding shall be commenced by any Loan Party or any
Subsidiary of a Loan Party, or by any Governmental Authority having jurisdiction
over any Loan Party or any Subsidiary of a Loan Party, seeking to establish the
invalidity or unenforceability thereof, or any Loan Party or any Subsidiary of a
Loan Party shall deny that it has any liability or obligation purported to be
created under any Loan Document,
8.15. If any Loan Party or any of its Subsidiaries or any
of their ERISA Affiliates shall have made a complete or partial withdrawal from
a Multiemployer Plan, and, as a result of such complete or partial withdrawal,
such Loan Party or any of its Subsidiaries or such ERISA Affiliate incurs a
withdrawal liability in an annual amount exceeding $50,000 or a Multiemployer
Plan enters reorganization status under Section 4241 of ERISA, and, as a result
thereof, a Loan Party's or such Subsidiary's, or such ERISA Affiliate's annual
contribution requirement with respect to such Multiemployer Plan increases in an
annual amount exceeding $50,000; or
8.16. If any Termination Event with respect to any Benefit
Plan shall have occurred, and, 30 days thereafter, (i) such Termination Event
(if correctable) shall not have been corrected, and (ii) the then current value
of such Benefit Plan's vested benefits exceeds the then current value of assets
allocable to such benefits in such Benefit Plan by more than $50,000 (or, in the
case of a Termination Event involving liability under Section 409, 502(i),
502(l), 515,
72
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of
the Code, the liability is in excess of such amount).
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1. RIGHTS AND REMEDIES. Upon the occurrence, and during
the continuation, of an Event of Default, the Required Lenders (at their
election but without notice of their election and without demand) may, authorize
and instruct Agent to do any one or more of the following on behalf of the
Lender Group (and Agent, acting upon the instructions of the Required Lenders,
shall do the same on behalf of the Lender Group), all of which are authorized by
Borrowers:
(a) Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;
(b) Cease advancing money or extending credit to or
for the benefit of Borrowers under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other
Loan Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Collateral Agent's Liens in the Collateral and
without affecting the Obligations; and
(d) The Lender Group shall have all other rights and
remedies available to it at law or in equity pursuant to any other Loan
Documents; provided, however, that upon the occurrence of any Event of Default
described in Section 8.4 or Section 8.5, in addition to the remedies set forth
above, without any notice to Loan Parties or any other Person or any act by the
Lender Group, the Obligations then outstanding, together with all accrued and
unpaid interest thereon, and all fees and all other amounts due under this
Agreement and the other Loan Documents, shall automatically and immediately
become due and payable, without presentment, demand, protest, or notice of any
kind, all of which are expressly waived by Loan Parties.
9.2. REMEDIES CUMULATIVE. The rights and remedies of the
Lender Group under this Agreement, the other Loan Documents, and all other
agreements shall be cumulative. The Lender Group shall have all other rights and
remedies not inconsistent herewith as provided under the Code, by law, or in
equity. No exercise by the Lender Group of one right or remedy shall be deemed
an election, and no waiver by the Lender Group of any Event of Default shall be
deemed a continuing waiver. No delay by the Lender Group shall constitute a
waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Loan Party fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its Permitted
Discretion and without prior notice to any Loan Party, may do any or all of the
following: (a) make payment of the same or any part thereof, (b) set up such
Availability Reserves as Agent deems necessary to protect the Lender Group from
the exposure created by
73
such failure, or (c) in the case of the failure to comply with Section 6.8
hereof, obtain and maintain insurance policies of the type described in Section
6.8 and take any action with respect to such policies as Agent deems prudent.
Any such amounts paid by Agent shall constitute Lender Group Expenses and any
such payments shall not constitute an agreement by the Lender Group to make
similar payments in the future or a waiver by the Lender Group of any Event of
Default under this Agreement. Agent need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1. DEMAND; PROTEST; ETC.. Each Loan Party waives demand,
protest, notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which any such Loan Party may in any way be liable.
11.2. THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Each
Loan Party hereby agrees that: (a) so long as the Lender Group complies with its
obligations, if any, under the Code, Agent shall not in any way or manner be
liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss
or damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Collateral shall be borne by Loan
Parties.
11.3. INDEMNIFICATION. Each Loan Party shall pay,
indemnify, defend, and hold the Agent-Related Persons, the Lender-Related
Persons, and each Participant (each, an "Indemnified Person") harmless (to the
fullest extent permitted by law) from and against any and all claims, demands,
suits, actions, investigations, proceedings, and damages, and all reasonable
attorneys fees and disbursements and other costs and expenses actually incurred
in connection therewith (as and when they are incurred and irrespective of
whether suit is brought), at any time asserted against, imposed upon, or
incurred by any of them (a) in connection with or as a result of or related to
the execution, delivery, enforcement, performance, or administration (including
any restructuring or workout with respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby or the
monitoring of Loan Parties' compliance with the terms of the Loan Documents, and
(b) with respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The
foregoing to the contrary notwithstanding, Loan Parties shall have no obligation
to any Indemnified Person under this Section 11.3 with respect to any
Indemnified Liability that a court of competent jurisdiction finally determines
to have resulted from the gross negligence or willful misconduct of such
Indemnified Person. This provision shall survive the termination of this
Agreement and the repayment of the Obligations. If any Indemnified Person makes
any payment to any other Indemnified Person with respect to an Indemnified
Liability as to which Loan Parties were required to indemnify the Indemnified
Person receiving such payment, the Indemnified Person
74
making such payment is entitled to be indemnified and reimbursed by Loan Parties
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
11.4. ENVIRONMENTAL INDEMNITY. Without limiting Section
11.3 hereof, each Borrower shall pay, indemnify, defend, and hold harmless each
Indemnified Person against any and all Environmental Liabilities and Costs and
all other claims, demands, penalties, fines, liability (including strict
liability), losses, damages, costs and expenses (including reasonable legal fees
and expenses, consultant fees and laboratory fees), arising out of (a) any
releases or threatened releases of any Hazardous Materials (i) at any property
presently or formerly owned or operated by any Loan Party or any Subsidiary of a
Loan Party, or any predecessor in interest, or (ii) generated and disposed of by
a Loan Party or any Subsidiary of a Loan Party, or any predecessor in interest;
(b) any violations of Environmental Laws; (c) any Environmental Action relating
to a Loan Party or any Subsidiary of a Loan Party, or any predecessor in
interest; (d) any personal injury (including wrongful death) or property damage
(real or personal) arising out of exposure to Hazardous Materials used, handled,
generated, transported or disposed by a Loan Party or any Subsidiary of a Loan
Party, or any predecessor in interest; and (e) any breach of any warranty or
representation regarding environmental matters made by the Loan Parties in any
Loan Document.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Loan Parties or Agent to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at such email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Loan
Parties in care of Administrative Borrower or to Agent, as the case may be, at
its address set forth below:
If to Administrative Borrower: SOURCE INTERLINK COMPANIES, INC.
00000 Xxxxxxxxx Xxxxxx Xxxx.
Xxxxx 000
Xxxxxx Xxxxxxx, Xxxxxxx
Attn: Xxxx Xxxxxxx
Fax No. 000-000-0000
75
with copies to: Xxxxx Xxxxx, P.A.
AutoNation Tower
110 S.E. 6th Street, 15th Floor
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax No.000-000-0000
If to Agent:
HILCO CAPITAL LP
One Northbrook Place
0 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Portfolio Administrator
Fax No. (000) 000-0000
with copies to: XXXXXX & XXXXXXX LLP
Suite 5800, Sears Tower
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxx
Fax No. 000-000-0000
Agent and Administrative Borrower may change the address at
which they are to receive notices hereunder, by notice in writing in the
foregoing manner given to the other party. All notices or demands sent in
accordance with this Section 12, other than notices by Agent in connection with
enforcement rights against the Collateral under the provisions of the Code,
shall be deemed received on the earlier of the date of actual receipt or 3
Business Days after the deposit thereof in the mail. Each Loan Party
acknowledges and agrees that notices sent by the Lender Group in connection with
the exercise of enforcement rights against Collateral under the provisions of
the Code shall be deemed sent when deposited in the mail or personally
delivered, or, where permitted by law, transmitted by telefacsimile or any other
method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN THE
76
STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK,
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. LOAN PARTIES AND THE LENDER GROUP WAIVE, TO THE
EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
(c) LOAN PARTIES AND THE LENDER GROUP HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. LOAN PARTIES AND THE LENDER GROUP
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1. ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may assign and delegate to one or more
assignees (each an "Assignee") that are Eligible Transferees all, or any ratable
part of all, of the Obligations, the Commitments and the other rights and
obligations of such Lender hereunder and under the other Loan Documents, in a
minimum amount of $1,000,000; provided, however, that Borrowers and Agent may
continue to deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses, and related information with
respect to the Assignee, have been given to Administrative Borrower and Agent by
such Lender and the Assignee, (ii) such Lender and its Assignee have delivered
to Administrative Borrower and Agent an Assignment and Acceptance, and (iii) the
assignor Lender or Assignee has paid to Agent for Agent's separate account a
processing fee in the amount of $5,000. In addition, any Lender may, without the
consent of Agent or Borrower, pledge such Lender's Term Loan and all of its
rights under this Agreement and the other Loan Documents (including any note
executed by any Borrower in connection with this Agreement) to its lenders in
support of borrowings made by such Lender from such lenders. Anything contained
herein to the contrary notwithstanding, the payment of any fees shall not be
required and the Assignee need not be an Eligible Transferee if such assignment
is in connection with any merger, consolidation, sale, transfer, or other
disposition of all or any substantial portion of the business or loan portfolio
of the assigning Lender.
77
(b) From and after the date that Agent notifies the
assignor Lender (with a copy to Administrative Borrower) that it has received an
executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assignor Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (except with respect to Section 11.3 hereof) and be released from any
future obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall effect
a novation between Borrowers and the Assignee; provided, however, that nothing
contained herein shall release any assigning Lender from obligations that
survive the termination of this Agreement, including such assigning Lender's
obligations under Article 16 and Section 17.8 of this Agreement.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (1) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (5) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon Agent's receipt of the required
processing fee payment and the fully executed Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. The Commitment allocated to each Assignee
shall reduce such Commitments of the assigning Lender pro tanto.
(e) Subject to the prior written consent of Agent
(which may be granted or refused in the sole discretion of Agent), a Lender may
sell to one or more commercial banks, financial institutions, or other Persons
not Affiliates of such Lender (a "Participant")
78
participating interests in its Obligations, the Commitment, and the other rights
and interests of that Lender (the "Originating Lender") hereunder and under the
other Loan Documents; provided, however, that (i) the Originating Lender shall
remain a "Lender" for all purposes of this Agreement and the other Loan
Documents and the Participant receiving the participating interest in the
Obligations, the Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a "Lender" hereunder or under
the other Loan Documents and the Originating Lender's obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrowers,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, or (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, and (v) all amounts payable by Borrowers hereunder shall be
determined as if such Lender had not sold such participation; except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement. The rights of any Participant
only shall be derivative through the Originating Lender with whom such
Participant participates and no Participant shall have any rights under this
Agreement or the other Loan Documents or any direct rights as to the other
Lenders, Agent, Borrowers, the Collections of Borrowers or their Subsidiaries,
the Collateral, or otherwise in respect of the Obligations. No Participant shall
have the right to participate directly in the making of decisions by the Lenders
among themselves.
(f) In connection with any such assignment or
participation or proposed assignment or participation, (i) Borrowers shall, if
necessary, execute any documents reasonably required to effectuate such
assignment or participation by a Lender pursuant to Section 14.1, including,
without limitation, amendments to this Agreement or any other Loan Document, as
Agent shall reasonably deem necessary to effect the forgoing, and (ii) a Lender
may, subject to the provisions of Section 17.8, disclose all documents and
information which it now or hereafter may have relating to Borrowers and their
Subsidiaries and their respective businesses.
(g) Any other provision in this Agreement
notwithstanding, any Lender may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this Agreement in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Bank or U.S. Treasury Regulation 31 CFR Section 203.24, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
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14.2. SUCCESSORS. This Agreement shall bind and inure to
the benefit of the respective successors and assigns of each of the parties;
provided, however, that Borrowers may not assign this Agreement or any rights or
duties hereunder without the Lenders' prior written consent and any prohibited
assignment shall be absolutely void ab initio. No consent to assignment by the
Lenders shall release any Borrower from its Obligations. A Lender may assign
this Agreement and the other Loan Documents and its rights and duties hereunder
and thereunder pursuant to Section 14.1 hereof and, except as expressly required
pursuant to Section 14.1 hereof, no consent or approval by any Borrower is
required in connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1. AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by Loan Parties therefrom, shall be effective unless
the same shall be in writing and signed by the Required Lenders (or by Agent at
the written request of the Required Lenders) and Administrative Borrower (on
behalf of all Loan Parties) and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent shall,
unless in writing and signed by all of the Lenders affected thereby and
Administrative Borrower (on behalf of all Loan Parties) and acknowledged by
Agent, do any of the following:
(a) increase any Commitment of any Lender,
(b) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of principal, interest,
fees, or other amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest
on, the Term Loan, or reduce any fees or other amounts payable hereunder or
under any other Loan Document,
(d) change the percentage of the Commitments that is
required to take any action hereunder,
(e) amend or modify this Section or any provision of
the Agreement providing for consent or other action by all Lenders,
(f) change the definition of "Required Lenders" or
"Pro Rata Share",
(g) contractually subordinate any of the Collateral
Agent's Liens,
(h) release any Borrower or Guarantor from any
obligation for the payment of money, or
(i) amend any of the provisions of Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, affect the rights or duties of Agent,
under this Agreement or any other
80
Loan Document. The foregoing notwithstanding, any amendment, modification,
waiver, consent, termination, or release of, or with respect to, any provision
of this Agreement or any other Loan Document that relates only to the
relationship of the Lender Group among themselves, and that does not affect the
rights or obligations of Loan Parties, shall not require consent by or the
agreement of Loan Parties.
15.2. REPLACEMENT OF HOLDOUT LENDER. If any action to be
taken by the Lender Group or Agent hereunder requires the unanimous consent,
authorization, or agreement of all Lenders, and a Lender ("Holdout Lender")
fails to give its consent, authorization, or agreement, then Agent, upon at
least 5 Business Days prior irrevocable notice to the Holdout Lender, may
permanently replace the Holdout Lender with one or more substitute Lenders
(each, a "Replacement Lender"), and the Holdout Lender shall have not right to
refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall
specify an effective date for such replacement, which date shall not be later
than 15 Business Days after the date such notice is given.
Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of Section 14.1.
15.3. NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent
or any Lender to exercise any right, remedy, or option under this Agreement or,
any other Loan Document, or delay by Agent or any Lender in exercising the same,
will operate as a waiver thereof. No waiver by Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by Agent or any Lender on any occasion shall affect or
diminish Agent's and each Lender's rights thereafter to require strict
performance by Loan Parties of any provision of this Agreement. Agent's and each
Lender's rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy that Agent or any
Lender may have.
16. AGENT; THE LENDER GROUP.
16.1. APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender
hereby designates and appoints Hilco as its representative under this Agreement
and the other Loan Documents and each Lender hereby irrevocably authorizes Agent
to execute and deliver each of the other Loan Documents on its behalf and to
take such other action on its behalf under the provisions of this Agreement and
each other Loan Document and to exercise such powers and perform such duties as
are expressly delegated to Agent by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Agent agrees to act as such on the express conditions contained in this Section
16. The provisions of this Section 16 (other than the proviso to Section
16.11(d)) are solely for the benefit of Agent, and the Lenders, and Loan Parties
and their Subsidiaries shall have no rights as a third party
81
beneficiary of any of the provisions contained herein. Any provision to the
contrary contained elsewhere in this Agreement or in any other Loan Document
notwithstanding, Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent; it being
expressly understood and agreed that the use of the word "Agent" is for
convenience only, that Hilco is merely the representative of the Lenders, and
only has the contractual duties set forth herein. Except as expressly otherwise
provided in this Agreement, Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions that Agent expressly is
entitled to take or assert under or pursuant to this Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, or of any
other provision of the Loan Documents that provides rights or powers to Agent,
Lenders agree that Agent shall have the right to exercise the following powers
as long as this Agreement remains in effect: (a) maintain, in accordance with
its customary business practices, ledgers and records reflecting the status of
the Obligations, the Collateral and related matters, (b) direct the Collateral
Agent to execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents, (c)
open and maintain such bank accounts and cash management arrangements as Agent
deems necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral, (d) perform, exercise, and
enforce and/or direct the Collateral Agent to perform, exercise and enforce any
and all other rights and remedies of the Lender Group with respect to Loan
Parties, the Obligations, the Collateral, or otherwise related to any of same as
provided in the Loan Documents, and (e) incur and pay such Lender Group Expenses
as Agent may deem necessary or appropriate for the performance and fulfillment
of its functions and powers pursuant to the Loan Documents.
16.2. DELEGATION OF DUTIES. Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Agent shall not be responsible
for the negligence or misconduct of any agent or attorney-in-fact that it
selects as long as such selection was made without gross negligence or willful
misconduct.
16.3. LIABILITY OF AGENT. None of the Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by any Loan Party or any
Subsidiary or Affiliate of any Loan Party, or any officer or director thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
any Loan Party or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or
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conditions of, this Agreement or any other Loan Document, or to inspect the
Books or properties of Loan Parties or the books or records or properties of any
of Loan Parties' Subsidiaries or Affiliates.
16.4. RELIANCE BY AGENT. Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent, or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to Borrowers or counsel to any Lender), independent accountants and other
experts selected by Agent. Agent shall be fully justified in failing or refusing
to take any action under this Agreement or any other Loan Document unless Agent
shall first receive such advice or concurrence of the Lenders as it deems
appropriate and until such instructions are received, Agent shall act, or
refrain from acting, as it deems advisable. If Agent so requests, it shall first
be indemnified to its reasonable satisfaction by the Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the requisite Lenders and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
16.5. NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall
not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default, except with respect to defaults in the payment of principal,
interest, fees, and expenses required to be paid to Agent for the account of the
Lenders and, except with respect to Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or
Administrative Borrower referring to this Agreement, describing such Default or
Event of Default, and stating that such notice is a "notice of default." Agent
promptly will notify the Lenders of its receipt of any such notice or of any
Event of Default of which Agent has actual knowledge. If any Lender obtains
actual knowledge of any Event of Default, such Lender promptly shall notify the
other Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 16.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
16.6. CREDIT DECISION. Each Lender acknowledges that none
of the Agent-Related Persons has made any representation or warranty to it, and
that no act by Agent hereinafter taken, including any review of the affairs of
Loan Parties and their Subsidiaries or Affiliates, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Loan Parties and any other Person party to a Loan Document,
and all applicable bank regulatory laws relating to the
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transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Loan Parties. Each Lender also represents that
it will, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Loan Parties and any other Person party to a Loan Document.
Except for notices, reports, and other documents expressly herein required to be
furnished to the Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Loan Parties and any other Person party to a
Loan Document that may come into the possession of any of the Agent-Related
Persons.
16.7. COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur
and pay Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, attorneys
fees and expenses, fees and expenses of financial accountants, advisors,
consultants, and appraisers, costs of collection by outside collection agencies,
auctioneer fees and expenses, and costs of security guards or insurance premiums
paid to maintain the Collateral, whether or not Loan Parties are obligated to
reimburse Agent or Lenders for such expenses pursuant to the Loan Agreement or
otherwise. Each Lender hereby agrees that it is and shall be obligated to pay to
or reimburse Agent for the amount of such Lender's Pro Rata Share thereof.
Whether or not the transactions contemplated hereby are consummated, the Lenders
shall indemnify upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of Loan Parties and without limiting the obligation
of Loan Parties to do so), according to their Pro Rata Shares, from and against
any and all Indemnified Liabilities; provided, however, that no Lender shall be
liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender shall
reimburse Agent upon demand for such Lender's Pro Rata Share of any costs or
out-of-pocket expenses (including attorneys, accountants, advisors, and
consultants fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Loan Parties. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8. AGENT IN INDIVIDUAL CAPACITY. Hilco and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in, and generally engage in any kind of
banking, trust, financial advisory, underwriting, or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person party to
any Loan Documents as though Hilco were not Agent hereunder, and, in each case,
without notice to or consent of the other members of the Lender Group. The other
members of the Lender Group acknowledge that, pursuant to such activities, Hilco
or its Affiliates may receive information
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regarding Loan Parties or their Affiliates and any other Person party to any
Loan Documents that is subject to confidentiality obligations in favor of Loan
Parties or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Hilco in its individual capacity.
16.9. SUCCESSOR AGENT. Agent may resign as Agent upon 45
days notice to the Lenders. If Agent resigns under this Agreement, the Required
Lenders shall appoint a successor Agent for the Lenders. If no successor Agent
is appointed prior to the effective date of the resignation of Agent, Agent may
appoint, after consulting with the Lenders, a successor Agent. If Agent has
materially breached or failed to perform any material provision of this
Agreement or of applicable law, the Required Lenders may agree in writing to
remove and replace Agent with a successor Agent from among the Lenders. In any
such event, upon the acceptance of its appointment as successor Agent hereunder,
such successor Agent shall succeed to all the rights, powers, and duties of the
retiring Agent and the term "Agent" shall mean such successor Agent and the
retiring Agent's appointment, powers, and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 16 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement. If no successor Agent
has accepted appointment as Agent by the date which is 45 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Lenders appoint a
successor Agent as provided for above.
16.10. LENDER IN INDIVIDUAL CAPACITY. Any Lender and its
respective Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, acquire equity interests in and generally engage in
any kind of banking, trust, financial advisory, underwriting or other business
with Loan Parties and their Subsidiaries and Affiliates and any other Person
(other than the Lender Group) party to any Loan Documents as though such Lender
were not a Lender hereunder without notice to or consent of the other members of
the Lender Group. The other members of the Lender Group acknowledge that,
pursuant to such activities, such Lender and its respective Affiliates may
receive information regarding Loan Parties or their Affiliates and any other
Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Loan Parties or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them.
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16.11. WITHHOLDING TAXES.
(a) If any Lender is a "foreign person" within the
meaning of the IRC and such Lender claims exemption from, or a reduction of,
U.S. withholding tax under Sections 1441 or 1442 of the IRC, such Lender agrees
with and in favor of Agent and Borrowers, to deliver to Agent and Administrative
Borrower:
(i) if such Lender claims an exemption from
withholding tax pursuant to its portfolio interest exception, (A) a
statement of the Lender, signed under penalty of perjury, that it is
not a (I) a "bank" as described in Section 881(c)(3)(A) of the IRC,
(II) a 10% shareholder of a Borrower (within the meaning of Section
871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation
related to a Borrower within the meaning of Section 864(d)(4) of the
IRC, and (B) a properly completed and executed IRS Form W-8BEN, before
the first payment of any interest under this Agreement and at any other
time reasonably requested by Agent or Administrative Borrower;
(ii) if such Lender claims an exemption from, or
a reduction of, withholding tax under a United States tax treaty,
properly completed and executed IRS Form W-8BEN before the first
payment of any interest under this Agreement and at any other time
reasonably requested by Agent or Administrative Borrower;
(iii) if such Lender claims that interest paid
under this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or
business of such Lender, two properly completed and executed copies of
IRS Form W-8ECI before the first payment of any interest is due under
this Agreement and at any other time reasonably requested by Agent or
Administrative Borrower;
(iv) such other form or forms as may be required
under the IRC or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction
of, withholding tax under a United States tax treaty by providing IRS Form
W-8BEN and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrowers to such Lender, such
Lender agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrowers to such Lender. To the extent
of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the
applicable withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to Agent, then Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
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(d) If the IRS or any other Governmental Authority of
the United States or other jurisdiction asserts a claim that Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Lender shall indemnify and hold Agent harmless for
all amounts paid, directly or indirectly, by Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to Agent under this Section, together with
all costs and expenses (including attorneys fees and expenses). The obligation
of the Lenders under this subsection shall survive the payment of all
Obligations and the resignation or replacement of Agent.
(e) All payments made by Borrowers hereunder or under
any note or other Loan Document will be made without setoff, counterclaim, or
other defense, except as required by applicable law other than for Taxes (as
defined below). All such payments will be made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction (other than the United States) or by any political
subdivision or taxing authority thereof or therein (other than of the United
States) with respect to such payments (but excluding, any tax imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein (i) measured by or based on the net income or net profits of a Lender,
or (ii) to the extent that such tax results from a change in the circumstances
of the Lender, including a change in the residence, place of organization, or
principal place of business of the Lender, or a change in the branch or lending
office of the Lender participating in the transactions set forth herein) and all
interest, penalties or similar liabilities with respect thereto (all such
non-excluded taxes, levies, imposts, duties, fees, assessments or other charges
being referred to collectively as "Taxes"). If any Taxes are so levied or
imposed, each Borrower agrees to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all amounts due
under this Agreement or under any note, including any amount paid pursuant to
this Section 16.11(e) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided, however,
that Borrowers shall not be required to increase any such amounts payable to
Agent or any Lender (i) that is not organized under the laws of the United
States, if such Person fails to comply with the other requirements of this
Section 16.11, or (ii) if the increase in such amount payable results from
Agent's or such Lender's own willful misconduct or gross negligence. Borrowers
will furnish to Agent as promptly as possible after the date the payment of any
Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by Borrowers.
16.12. COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent,
at its option and in its sole discretion, to release or authorize the release of
any Lien on any Collateral (i) upon the termination of the Commitments and
payment and satisfaction in full by Loan Parties of all Obligations, (ii)
constituting property being sold or disposed of if a release is required or
desirable in connection therewith and if Administrative Borrower certifies to
Agent that the sale or disposition is permitted under Section 7.4 of this
Agreement or the other Loan Documents (and Agent may rely conclusively on any
such certificate, without further inquiry),
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(iii) constituting property in which no Loan Party or its Subsidiaries owned any
interest at the time the Collateral Agent's Lien was granted nor at any time
thereafter, or (iv) constituting property leased to a Loan Party or its
Subsidiaries under a lease that has expired or is terminated in a transaction
permitted under this Agreement. Except as provided above, Agent will not execute
and deliver or otherwise authorize any release of any Lien on any Collateral
without the prior written authorization of (y) if the release is of all or
substantially all of the Collateral, all of the Lenders, or (z) otherwise, the
Required Lenders. Upon request by Agent or Administrative Borrower at any time,
the Lenders will confirm in writing Agent's authority to release any such Liens
on particular types or items of Collateral pursuant to this Section 16.12;
provided, however, that (1) Agent shall not be required to execute any document
necessary to evidence such release on terms that, in Agent's opinion, would
expose Agent to liability or create any obligation or entail any consequence
other than the release of such Lien without recourse, representation, or
warranty, and (2) such release shall not in any manner discharge, affect, or
impair the Obligations or any Liens (other than those expressly being released)
upon (or obligations of Loan Parties in respect of) all interests retained by
Loan Parties, including, the proceeds of any sale, all of which shall continue
to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any
of the Lenders to assure that the Collateral exists or is owned by Borrowers or
is cared for, protected, or insured or has been encumbered, or that the
Collateral Agent's Liens have been properly or sufficiently or lawfully created,
perfected, protected, or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
16.13. RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF
PAYMENTS.
(a) Each of the Lenders agrees that it shall not,
without the express written consent of Agent, and that it shall, to the extent
it is lawfully entitled to do so, upon the written request of Agent, set off
against the Obligations, any amounts owing by such Lender to Loan Parties or any
deposit accounts of Loan Parties now or hereafter maintained with such Lender.
Each of the Lenders further agrees that it shall not, unless specifically
requested to do so in writing by Agent, take or cause to be taken any action,
including, the commencement of any legal or equitable proceedings, to foreclose
any Lien on, or otherwise enforce any security interest in, any of the
Collateral.
(b) If, at any time or times any Lender shall receive
(i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or
any payments with respect to the Obligations, except for any such proceeds or
payments received by such Lender from Agent pursuant to the terms of this
Agreement, or (ii) payments from Agent in excess of such Lender's ratable
portion of all such distributions by Agent, such Lender promptly shall (1) turn
the same over to Agent, in kind, and with such endorsements as may be required
to negotiate the same to
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Agent, or in immediately available funds, as applicable, for the account of all
of the Lenders and for application to the Obligations in accordance with the
applicable provisions of this Agreement, or (2) purchase, without recourse or
warranty, an undivided interest and participation in the Obligations owed to the
other Lenders so that such excess payment received shall be applied ratably as
among the Lenders in accordance with their Pro Rata Shares; provided, however,
that to the extent that such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
16.14. AGENCY FOR PERFECTION. Agent hereby appoints each
other Lender as its agent (and each Lender hereby accepts such appointment) for
the purpose of perfecting the Collateral Agent's Liens in assets which, in
accordance with Article 9 of the Code can be perfected only by possession or
control. Should any Lender obtain possession or control of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent's request
therefor shall deliver possession or control of such Collateral to Collateral
Agent or in accordance with Agent's instructions.
16.15. PAYMENTS BY AGENT TO THE LENDERS. All payments to be
made by Agent to the Lenders shall be made by bank wire transfer of immediately
available funds pursuant to such wire transfer instructions as each party may
designate for itself by written notice to Agent. Concurrently with each such
payment, Agent shall identify whether such payment (or any portion thereof)
represents principal, premium, or interest of the Obligations.
16.16. CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS.
Each member of the Lender Group authorizes and directs Agent and/or Collateral
Agent, as applicable, to enter into this Agreement, the Intercreditor and
Collateral Agency Agreement and the other Loan Documents. Each member of the
Lender Group agrees that any action taken by Agent and/or Collateral Agent in
accordance with the terms of this Agreement, the Intercreditor and Collateral
Agency Agreement and the other Loan Documents relating to the Collateral and the
exercise by Agent and/or Collateral Agent of its powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders.
16.17. FIELD AUDITS AND EXAMINATION REPORTS;
CONFIDENTIALITY; DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By
becoming a party to this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish
such Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by
Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does
not (i) make any representation or warranty as to the accuracy of any Report,
and (ii) shall not be liable for any information contained in any Report,
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(c) expressly agrees and acknowledges that the
Reports are not comprehensive audits or examinations, that Agent or other party
performing any audit or examination will inspect only specific information
regarding Loan Parties and will rely significantly upon the Books, as well as on
representations of Loan Parties' personnel,
(d) agrees to keep all Reports and other material,
non-public information regarding Loan Parties and their Subsidiaries and their
operations, assets, and existing and contemplated business plans in a
confidential manner in accordance with Section 17.8, and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or fail to take or any conclusion the indemnifying
Lender may reach or draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or may make to Loan
Parties, or the indemnifying Lender's participation in, or the indemnifying
Lender's purchase of, a loan or loans of Borrowers; and (ii) to pay and protect,
and indemnify, defend and hold Agent, and any such other Lender preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including, attorneys fees and costs)
incurred by Agent and any such other Lender preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any Report
through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Loan Parties to Agent that has not been contemporaneously
provided by Loan Parties to such Lender, and, upon receipt of such request,
Agent shall provide a copy of same to such Lender, (y) to the extent that Agent
is entitled, under any provision of the Loan Documents, to request additional
reports or information from Loan Parties, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Administrative
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Administrative Borrower a statement regarding the Loan Account, Agent shall
send a copy of such statement to each Lender.
16.18. SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding
that certain of the Loan Documents now or hereafter may have been or will be
executed only by or in favor of Agent in its capacity as such, and not by or in
favor of the Lenders, any and all obligations on the part of Agent (if any) to
make any credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member
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of the Lender Group shall have any liability for the acts or any other member of
the Lender Group. No Lender shall be responsible to any Borrower or any other
Person for any failure by any other Lender to fulfill its obligations to make
credit available hereunder, nor to advance for it or on its behalf in connection
with its Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
17. GENERAL PROVISIONS.
17.1. EFFECTIVENESS. This Agreement shall be binding and
deemed effective when executed by Loan Parties, Agent, and each Lender whose
signature is provided for on the signature pages hereof.
17.2. SECTION HEADINGS. Headings and numbers have been set
forth herein for convenience only. Unless the contrary is compelled by the
context, everything contained in each Section applies equally to this entire
Agreement.
17.3. INTERPRETATION. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against the
Lender Group or Loan Parties, whether under any rule of construction or
otherwise. On the contrary, this Agreement has been reviewed by all parties and
shall be construed and interpreted according to the ordinary meaning of the
words used so as to accomplish fairly the purposes and intentions of all parties
hereto.
17.4. SEVERABILITY OF PROVISIONS. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
17.5. AMENDMENTS IN WRITING. This Agreement only can be
amended by a writing in accordance with Section 15.1.
17.6. COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement
may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be
deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement. Delivery of an executed counterpart
of this Agreement by telefacsimile shall be equally as effective as delivery of
an original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile also shall deliver an
original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement. The foregoing shall apply to each other Loan
Document mutatis mutandis.
17.7. REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the
incurrence or payment of the Obligations by any Borrower or Guarantor or the
transfer to the Lender Group of any property should for any reason subsequently
be declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or transfers of property (collectively, a "Voidable Transfer"), and if
the Lender Group is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
then, as to any such Voidable Transfer, or the amount thereof
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that the Lender Group is required or elects to repay or restore, and as to all
reasonable costs, expenses, and attorneys fees of the Lender Group related
thereto, the liability of Borrowers or Guarantor automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had
never been made.
17.8. CONFIDENTIALITY. The Agent and the Lenders each
individually (and not jointly or jointly and severally) agree that material,
non-public information regarding Borrowers and their Subsidiaries, their
operations, assets, and existing and contemplated business plans shall be
treated by Agent and the Lenders in a confidential manner, and shall not be
disclosed by Agent and the Lenders to Persons who are not parties to this
Agreement, except: (a) to attorneys for and other advisors, accountants,
auditors, and consultants to any member of the Lender Group, (b) to Subsidiaries
and Affiliates of any member of the Lender Group, provided that any such
Subsidiary or Affiliate shall have agreed to receive such information hereunder
subject to the terms of this Section 17.8, (c) as may be required by statute,
decision, or judicial or administrative order, rule, or regulation, (d) as may
be agreed to in advance by Administrative Borrower or its Subsidiaries or as
requested or required by any Governmental Authority pursuant to any subpoena or
other legal process, (e) as to any such information that is or becomes generally
available to the public (other than as a result of prohibited disclosure by
Agent or the Lenders), (f) in connection with any assignment, prospective
assignment, sale, prospective sale, participation or prospective participations,
or pledge or prospective pledge of any Lender's interest under this Agreement,
provided that any such assignee, prospective assignee, purchaser, prospective
purchaser, participant, prospective participant, pledgee, or prospective pledgee
shall have agreed in writing to receive such information hereunder subject to
the terms of this Section, and (g) in connection with any litigation or other
adversary proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties under
this Agreement or the other Loan Documents. The provisions of this Section 17.8
shall survive for 2 years after the payment in full of the Obligations. Anything
contained herein or in any other Loan Document to the contrary notwithstanding,
the obligations of confidentiality contained herein and therein, as they relate
to the transactions contemplated hereby, shall not apply to the federal tax
structure or federal tax treatment of such transactions, and each party hereto
(and any employee, representative, or agent of any party hereto) may disclose to
any and all Persons, without limitation of any kind, the federal tax structure
and federal tax treatment of such transactions (including all written materials
related to such tax structure and tax treatment). The preceding sentence is
intended to cause the transactions contemplated hereby to not be treated as
having been offered under conditions of confidentiality for purposes of Section
1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations
promulgated under Section 6011 of the IRC, and shall be construed in a manner
consistent with such purpose. In addition, each party hereto acknowledges that
it has no proprietary or exclusive rights to the tax structure of the
transactions contemplated hereby or any tax matter or tax idea related thereto.
17.9. INTEGRATION. This Agreement, together with the other
Loan Documents, reflects the entire understanding of the parties with respect to
the transactions contemplated hereby and shall not be contradicted or qualified
by any other agreement, oral or written, before the date hereof.
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17.10. PARENT AS AGENT FOR BORROWERS. Each Borrower hereby
irrevocably appoints Parent as the borrowing agent and attorney-in-fact for all
Borrowers (the "Administrative Borrower") which appointment shall remain in full
force and effect unless and until Agent shall have received prior written notice
signed by each Borrower that such appointment has been revoked and that another
Borrower has been appointed Administrative Borrower. Each Borrower hereby
irrevocably appoints and authorizes the Administrative Borrower (i) to provide
Agent with all notices and instructions under this Agreement and (ii) to take
such action as the Administrative Borrower deems appropriate on its behalf and
to exercise such other powers as are reasonably incidental thereto to carry out
the purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated group. To
induce the Lender Group to do so, and in consideration thereof, each Borrower
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 17.9 with respect to any liability that has been finally determined
by a court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of such Agent-Related Person or Lender-Related
Person, as the case may be.
17.11. LENDER ADVERTISING. Lenders shall be entitled to
advertise the closing of the transactions contemplated by this Agreement in such
trade publications, business journals, newspapers of general circulation and
otherwise, as Lenders shall deem appropriate, including, without limitation, the
publication of a tombstone announcing the closing of this transaction; provided,
however, each Lender may, without the consent of the Borrower, disclose the
closing of the transactions contemplated by this Agreement to such Lender's
investors or lenders or on such Lender's web site or in any other manner in the
ordinary course of such Lender's business.
18. GUARANTY.
18.1. GUARANTY; LIMITATION OF LIABILITY. Each Guarantor
hereby unconditionally and irrevocably jointly and severally guarantees the
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all Obligations of Borrowers now or hereafter existing under any
Loan Document, whether for principal, interest fees, expenses or otherwise (such
obligations, to the extent not paid by Borrowers, being the "Guaranteed
Obligations"), and agrees to pay any and all reasonable expenses (including
reasonable counsel fees and expenses) incurred by Agent and Lenders in enforcing
any rights under the guaranty set forth in this Section 18. Without limiting the
generality of the foregoing, the Guarantors'
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liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by Borrowers to Lenders under any Loan Document
but for the fact that they are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving
Borrower.
18.2. GUARANTY ABSOLUTE. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of Lenders
with respect thereto. The obligations of each Guarantor under this Section 18
are independent of the Guaranteed Obligations, and a separate action or actions
may be brought and prosecuted against each Guarantor to enforce such
obligations, irrespective of whether any action is brought against any Borrower
or whether any Borrower is joined in any such action or actions. The liability
of each Guarantor under this Section 18 shall be irrevocable, absolute and
unconditional irrespective of, and each Guarantor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any or all of the
following:
(a) any lack of validity or enforceability of any
Loan Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Guaranteed Obligations,
or any other amendment or waiver of or any consent to departure from any Loan
Document, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to any Borrower or
otherwise;
(c) any taking, exchange, release or non-perfection
of any Collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) any change, restructuring or termination of the
corporate structure or existence of any Borrower or Guarantor; or
(e) any other circumstance (including, without
limitation, any statute of limitations) or any existence of or reliance on any
representation by Lenders that might otherwise constitute a defense available
to, or a discharge of, any Guarantor, any Borrower or any other guarantor or
surety.
This Section 18 shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by Lenders or any other Person, all as though such
payment had not been made.
18.3. WAIVER. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Section 18 and any requirement that Collateral
Agent, Agent or Lenders exhaust any right or take any action against Borrowers
or any other Person or any Collateral. Each Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated herein and that the waiver set forth in this Section 18 is
knowingly made in contemplation of such benefits. Each Guarantor hereby waives
any right to revoke this
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Section 18, and acknowledges that this Section 18 is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.
18.4. CONTINUING GUARANTY; ASSIGNMENTS. This Section 18 is
a continuing guaranty and shall (a) remain in full force and effect until the
later of the cash payment in full of the Guaranteed Obligations (other than
indemnification obligations as to which no claim has been made) and all other
amounts payable under this Section 18 and the Maturity Date, (b) be binding upon
each Guarantor, their respective successors and assigns and (c) inure to the
benefit of and be enforceable by Agent and Lenders and its successors, pledgees,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), any Lender may pledge, assign or otherwise transfer all or any portion of
its rights and obligations under this Agreement (including, without limitation,
all or any portion of its loans owing to it and any note held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted such Lender herein or otherwise, in each
case as provided in Section 14.1.
18.5. SUBROGATION. No Guarantor will exercise any rights
that it may now or hereafter acquire against any Borrower or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
such Guarantor's obligations under this Section 18, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of
Lenders against any Borrower or any other insider guarantor or any Collateral,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from any Borrower or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security solely on account of such claim, remedy or right, unless and
until all of the Guaranteed Obligations and all other amounts payable under this
Section 18 shall have been paid in full in cash and this Agreement shall have
terminated. If any amount shall be paid to any Guarantor in violation of the
immediately preceding sentence at any time prior to the later of the payment in
full in cash of the Guaranteed Obligations and all other amounts payable under
this Section 18 and the termination of this Agreement, such amount shall be held
in trust for the benefit of Lenders and shall forthwith be paid to Agent to be
credited and applied to the Guaranteed Obligations and all other amounts payable
under this Section 18, whether matured or unmatured, in accordance with the
terms of this Agreement, or to be held as collateral for any Guaranteed
Obligations or other amounts payable under this Section 18 thereafter arising.
If (i) any Guarantor shall make payment to Lenders of all or any part of the
Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
amounts payable under this Section 18 shall be paid in full in cash and (iii)
this Agreement has terminated, Lenders will, at such Guarantor's request and
expense, execute and deliver to such Guarantor appropriate documents, without
recourse and without representation or warranty, necessary to evidence the
transfer by subrogation to such Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by such Guarantor.
18.6. JOINT AND SEVERAL OBLIGATIONS. All of the Guaranteed
Obligations of the Guarantors hereunder and the other Loan Documents are joint
and several. Lenders may, in their sole and absolute discretion, enforce the
provisions hereof against any of the Guarantors, and
95
shall not be required to proceed against all Guarantors jointly or seek payment
from the Guarantors ratably.
18.7. JUDGMENT CURRENCY. The specification under this
Agreement of US Dollars and payment in New York City is of the essence. Each
Guarantor's obligations hereunder and under the other Loan Documents to make
payments in US Dollars shall not be discharged or satisfied by any tender or
recovery pursuant to any judgment expressed in or converted into any currency
other than US Dollars, except to the extent that such tender or recovery results
in the effective receipt by Lender Group and Agent of the full amount of US
Dollars expressed to be payable to the Agent and Lender Group under this
Agreement or the other Loan Documents. If, for the purpose of obtaining or
enforcing judgment in any court, it is necessary to convert into or from any
currency other than US Dollars (such other currency being hereinafter referred
to as the "Judgment Currency") an amount due in US Dollars, the rate of exchange
used shall be that at which Lender Group or Agent could, in accordance with
normal banking procedures, purchase US Dollars with the Judgment Currency on the
Business Day preceding that on which final judgment is given. The obligation of
each Guarantor in respect of any such sum due from it to Lender Group or Agent
hereunder shall, notwithstanding any judgment in such Judgment Currency, be
discharged only to the extent that, on the Business Day immediately following
the date on which Lender Group or Agent receives any sum adjudged to be so due
in the Judgment Currency, Lender Group or Agent may, in accordance with normal
banking procedures, purchase US Dollars with the Judgment Currency. If the US
Dollars so purchased are less than the sum originally due to Agent or Lender
Group in US Dollars, each Guarantor agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify Lender Group and the Agent
against such loss, and if the US Dollars so purchased exceed the sum originally
due to Lender Group or the Agents in US Dollars, the applicable Lender and Agent
severally agree to remit to such Guarantor such excess.
18.8. CONFLICTS. Solely with respect to the Canadian
Guarantors, this Section 18 is intended to supplement, but not replace or amend,
each Canadian Guaranty, and in the case of any conflict or inconsistency between
any terms of this Section 18, on the one hand, and any Canadian Guaranty, on the
other hand, then the terms of such Canadian Guaranty shall be controlling.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
BORROWERS:
SOURCE INTERLINK COMPANIES, INC.
a Missouri Corporation
SOURCE-U.S. MARKETING SERVICES, INC.
a Delaware corporation
BRAND MANUFACTURING CORP.
a New York corporation
SOURCE-MYCO, INC.
a Delaware corporation
SOURCE-XXXXXX INDUSTRIES, INC.
a Delaware corporation
SOURCE-HUCK STORE FIXTURE COMPANY
a Delaware corporation
HUCK STORE FIXTURE COMPANY OF NORTH
CAROLINA
a North Carolina corporation
INTERNATIONAL PERIODICAL DISTRIBUTORS,
INC.
a Nevada corporation
SOURCE INTERLINK INTERNATIONAL, INC.
a Delaware corporation
XXXXX X. XXXXX, INC.
a New York corporation
By: /s/ Xxxx Xxxxxxx
---------------------------------------
Title: Authorized Signatory
[Signature Page to Hilco Loan Agreement]
GUARANTORS:
THE SOURCE-CANADA CORP.
an Ontario corporation
SOURCE INTERLINK CANADA INC.
a British Columbia corporation
SOURCE-CHESTNUT DISPLAY SYSTEMS, INC.
a Delaware corporation
T.C.E. CORPORATION
a Delaware corporation
VAIL COMPANIES, INC.
a Delaware corporation
THE INTERLINK COMPANIES, INC.
a Delaware corporation
UNIVERSAL CIRCULATION SERVICES, INC.
a California corporation
By: /s/ Xxxx Xxxxxxx
---------------------------------------
Title: Authorized Signatory
[Signature Page to Hilco Loan Agreement]
HILCO CAPITAL LP,
a Delaware limited partnership, as Agent and
as a Lender
By: /s/ Xxxx Xxxxx
----------------------------------------
Name: Xxxx Xxxxx
Title: Vice President
[Signature Page to Hilco Loan Agreement]
