Exhibit 10.20
THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
among
AMERICAN BUILDERS & CONTRACTORS SUPPLY CO., INC.
as Borrower,
BANK OF AMERICA, NATIONAL ASSOCIATION
as Agent and a Lender,
and
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
as Co-Agent and a Lender
and
THE OTHER LENDERS PARTY HERETO
Dated as of March 21, 2002
TABLE OF CONTENTS
1.DEFINITIONS..................................................................1
1.1 General Terms..................................................1
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1.2 Accounting Terms..............................................13
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1.3 Others Defined in Code........................................13
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1.4 Effect of Amendment and Restatement...........................13
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0.XXXXXX ..............................................................13
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2.1 Revolving Loans...............................................13
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2.2 Letters of Credit.............................................14
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2.3 Principal Balance of Liabilities Not to Exceed the
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Maximum Facility..............................................15
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2.4 Borrower's Loan Account.......................................15
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2.5 Statements....................................................16
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2.6 Interest and Fees.............................................16
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2.7 Method for Making Payments....................................17
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2.8 Term of this Agreement........................................17
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2.9 Optional Prepayments..........................................18
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2.10 Limitation on Charges.........................................18
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2.11 Method of Selecting Rate Options; Additional Provisions
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Regarding Eurodollar Loans....................................18
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2.12 Yield Protection..............................................20
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3. REPORTING AND ELIGIBILITY REQUIREMENTS/COLLATERAL..........................21
3.1 Reports.......................................................21
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3.2 Eligible Accounts.............................................22
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3.3 Account Warranties............................................23
3.4 Verification of Accounts......................................24
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3.5 Account Covenants.............................................24
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3.6 Collection of Accounts and Payments...........................24
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3.7 Appointment of the Agent as the Borrower's Attorney-in-Fact...25
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3.8 Chattel Paper and Instruments.................................25
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3.9 Notice to Account Debtors.....................................25
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3.10 Eligible Inventory............................................25
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3.11 Inventory Warranties..........................................26
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3.12 Inventory Records.............................................26
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3.13 Safekeeping of Inventory and Inventory Covenants..............26
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3.14 Equipment Warranties..........................................27
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3.15 Equipment Records.............................................27
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3.16 Safekeeping of Equipment......................................27
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3.17 Real Property.................................................27
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3.18 Maintenance of Properties.....................................27
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4. CONDITIONS OF ADVANCES....................................................27
4.1 The Borrower's Request........................................27
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4.2 Financial Condition...........................................28
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4.3 No Default....................................................28
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4.4 Other Requirements............................................28
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4.5 Representations and Warranties................................28
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5. COLLATERAL. ..............................................................29
5.1 Security Interest.............................................29
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5.2 Preservation of Collateral and Perfection of Security
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Interests Therein.............................................29
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5.3 Loss of Value of Collateral...................................30
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5.4 Cash Collateral...............................................30
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TABLE OF CONTENTS - Page i
5.5 Agent Not Obligated or Liable.................................31
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6. WARRANTIES ...............................................................31
6.1 Corporate Existence...........................................31
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6.2 Corporate Authority...........................................31
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6.3 Binding Effect................................................32
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6.4 Financial Data................................................32
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6.5 Liens and Encumbrances; Locations.............................32
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6.6 Solvency......................................................33
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6.7 Principal Place of Business...................................33
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6.8 Other Corporate Names.........................................33
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6.9 Tax Liabilities...............................................33
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6.10 Loans.........................................................33
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6.11 Margin Securities.............................................34
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6.12 Subsidiaries; Joint Ventures; Partnerships....................34
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6.13 Litigation and Proceedings....................................34
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6.14 Other Agreements..............................................34
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6.15 Employee Controversies........................................34
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6.16 Compliance with Laws and Regulations..........................35
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6.17 Patents, Trademarks, Licenses.................................35
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6.18 Environmental Matters.........................................35
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6.19 Fees to Third Parties.........................................35
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6.20 Securities Matters............................................35
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6.21 Disclosure....................................................36
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6.22 Equity Ownership..............................................36
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6.23 Pension Related Matters.......................................36
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7. AFFIRMATIVE COVENANTS.....................................................37
7.1 Financial Statements..........................................37
(a) --------------------
7.2 Inspection....................................................39
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7.3 Conduct of Business...........................................39
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7.4 Claims and Taxes..............................................40
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7.5 Costs and Expenses as Additional Liabilities..................40
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7.6 The Borrower's Liability Insurance............................40
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7.7 The Borrower's Property Insurance.............................41
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7.8 Pension Plans.................................................41
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7.9 Notice of Suit or Adverse Change in Business..................42
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7.10 Supervening Illegality........................................42
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7.11 Environmental Matters.........................................42
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7.12 Use of Proceeds...............................................43
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7.13 Notice of Business Interruption...............................43
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7.14 Interest Rate Protection......................................43
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8. NEGATIVE COVENANTS........................................................43
8.1 Encumbrances..................................................43
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8.2 Indebtedness..................................................44
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8.3 Consolidations, Mergers or Acquisitions.......................44
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8.4 Investments or Loans..........................................46
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8.5 Guarantees....................................................46
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8.6 Inventory Covenants...........................................47
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8.7 Disposal of Property..........................................47
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8.8 Capital Expenditure Limitations...............................47
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8.9 Loans to Officers; Consulting and Management Fees.............48
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TABLE OF CONTENTS - Page ii
8.10 Dividends and Stock Redemptions...............................48
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8.11 Amendment of Certificate of Incorporation or By-Laws..........48
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8.12 Disclosure of Obligations Under Leases, etc...................48
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8.13 Fiscal Year End...............................................49
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8.14 Transactions with Subsidiaries and Affiliates.................49
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8.15 Termination Events............................................49
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8.16 Bonuses.......................................................49
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8.17 Minimum Fixed Charge Coverage Ratio...........................49
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8.18 Maximum Funded Debt to EBITDA.................................49
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8.19 Minimum Average Unused Availability...........................49
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8.20 Senior Subordinated Notes and Related Guaranties..............50
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9. DEFAULT, RIGHTS AND REMEDIES OF THE LENDER................................50
9.1 Acceleration..................................................50
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9.2 Rights and Remedies Generally.................................51
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9.3 Entry Upon Premises and Access to Information.................51
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9.4 Sale or Other Disposition of Collateral by the Agent..........51
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9.5 Waiver of Demand..............................................52
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9.6 Waiver of Notice..............................................52
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9.7 Advice of Counsel.............................................52
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10. MISCELLANEOUS............................................................52
10.1 Waiver........................................................52
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10.2 Costs and Attorneys' Fees.....................................52
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10.3 Expenditures by the Agent.....................................53
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10.4 Custody and Preservation of Collateral........................53
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10.5 Reliance by the Agent and the Lenders.........................53
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10.6 Successors and Assigns........................................53
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10.7 Applicable Law; Severability..................................53
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10.8 Submission to Jurisdiction; Waiver of Bond; Waive of Right
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to Trial by Jury..............................................54
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10.9 Application of Payments.......................................54
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10.10 Marshaling; Payments Set Aside................................55
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10.11 Section Titles................................................55
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10.12 Continuing Effect.............................................55
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10.13 Notices.......................................................55
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10.14 Equitable Relief..............................................56
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10.15 Entire Agreement; Amendments..................................56
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10.16 Participations/Assignments....................................57
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10.17 Indemnity.....................................................58
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10.18 Representations and Warranties................................59
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10.19 Standard of Materiality.......................................59
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10.20 Ratable Sharing...............................................59
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11. THE AGENT ...............................................................59
11.1 Powers........................................................59
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11.2 Agent in its Capacity as a Lender.............................60
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11.3 Independent Credit Analysis...................................60
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11.4 General Immunity..............................................60
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11.5 Right to Indemnity............................................61
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11.6 Action by Agent...............................................61
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11.7 Proportionate Interest of Lenders under the Financing
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Agreements....................................................62
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11.8 Agent's Resignation...........................................62
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11.9 Disbursement of Proceeds of Loans and Other Advances..........62
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11.10 Participation in Letters of Credit............................63
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TABLE OF CONTENTS - Page iii
11.11 Apportionment of Payments.....................................63
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11.12 Agent Reports.................................................63
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11.13 Designated Senior Debt........................................64
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11.14 Amendment and Restatement.....................................64
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TABLE OF CONTENTS - Page iv
EXHIBITS
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Exhibit A Form of Revolving Credit Note
Exhibit B Form of Monthly Report
Exhibit C Reconciliation of Inventory and Accounts
Exhibit D Form of Collateral Report
Exhibit E Form of Certification
Exhibit F Form of Borrowing Notice
SCHEDULES
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Schedule 3.11 Inventory Locations
Schedule 3.14 Equipment Disclosures
Schedule 3.17a Owned Real Property
Schedule 3.17b Leased Real Property
Schedule 4.1 Authorized Persons
Schedule 5.1 Commercial Tort Claims
Schedule 6.1 States of Incorporation and Qualification
Schedule 6.5 Liens
Schedule 6.7 Principal Places of Business and Chief Executive Offices
Schedule 6.8 Other Names
Schedule 6.10 Debt for Borrowed Money
Schedule 6.13 Litigation and Claims
Schedule 6.14 Defaults under other Agreements
Schedule 6.15 Labor Matters
Schedule 6.17 Intellectual Property
Schedule 6.18 Environmental Matters
Schedule 6.22 Capitalization
Schedule 8.5 Guaranties
Schedule 8.9 Loans, Consulting Fees to Officers, Directors, Employees
or Stockholders
Schedule 8.16 Bonus Criteria
Schedules - Page Solo
THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Third Amended and Restated Loan and Security Agreement ("Agreement"),
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made as of the 21 day of March, 2002, by and among American Builders &
Contractors Supply Co., Inc., a Delaware corporation, with its principal place
of business and chief executive office at Xxx XXX Xxxxxxx, Xxxxxx, Xxxxxxxxx
00000 (the "Borrower"), the financial institutions listed on the signature pages
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hereof (individually, a "Lender" and collectively, the "Lenders"), and Bank of
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America, National Association (successor by merger to NationsBank, N.A.), with
its principal place of business located at 000 X. XxXxxxx Xx., 00xx Xxxxx, Mail
Code IL1-231-16-33, Xxxxxxx, XX 00000, in its capacity as administrative agent
(the "Agent"), and American National Bank and Trust Company of Chicago, with an
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office at 00 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 (the "Co-Agent"):
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WITNESSETH:
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WHEREAS, the Borrower, the Agent, the Co-Agent and the Lenders are parties
to that certain Second Amended and Restated Loan and Security Agreement dated as
of May 12, 1998, as subsequently amended from time to time, as evidenced by the
First Amendment to Second Amended and Restated Loan and Security Agreement dated
as of January 15, 1999, the Consent and Second Amendment to Second Amended and
Restated Loan and Security Agreement dated as of May 5, 1999, the Third
Amendment to Second Amended and Restated Second Loan and Security Agreement
dated as of November 3, 1999 and the Restated Third Amendment to Second Amended
and Restated Loan and Security Agreement dated as of November 3, 1999
(collectively the "Existing Loan Agreement"), pursuant to which Lenders have
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extended financial accommodations to the Borrower as provided therein;
WHEREAS, the Borrower, the Agent, the Co-Agent and the Lenders desire to
amend and restate the Existing Loan Agreement according to the terms and
conditions set forth hereinbelow and as a result thereof, the Borrower, the
Agent, the Co-Agent and the Lenders have executed and delivered this Agreement
which amends and restates, in its entirety, the Existing Loan Agreement;
NOW THEREFORE, in consideration of the terms and conditions contained
herein, and of any loans or financial accommodations heretofore, now or
hereafter made to or for the benefit of the Borrower by the Lenders, the parties
hereto hereby agree as follows:
1. DEFINITIONS.
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1.1 General Terms. When used herein, the following terms shall have
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the following meanings:
"Account Debtor" shall mean the party who is obligated on or under
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an Account.
"Accounts" shall mean all present and future accounts receivable and
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other rights of the Borrower to payment for goods sold or leased or for
services rendered, which are not evidenced by instruments or chattel
paper, and whether or not they have been earned by performance.
"Accounts Trial Balance" shall have the meaning assigned to such
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term in Section 3.1.
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"Additional Location" has the meaning assigned to such term in
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Section 8.3
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"Affiliate" shall mean any Person (a) that directly or indirectly,
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through one or more intermediaries, controls or is controlled by, or is
under common control with the Borrower, (b) that directly or beneficially
owns or holds twenty-five percent (25%) or more of any class of the voting
stock of the Borrower or (c) twenty-five percent (25%) or more of any
class of whose voting stock (or in the case of a Person which is not a
corporation, twenty-five percent (25%) or more of the equity interest) is
owned directly or beneficially or held by the Borrower.
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 1
"Affiliates Investments Limit" means an amount, determined as of the
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first day of each January, April, July and October (which amount, upon
each such determination, shall remain fixed until the next determination),
equal to the sum of Ten Million Dollars ($10,000,000.00) plus an amount
(not less than $0.00) equal to ten percent (10.0%) of the amount by which
the net income of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP for the period (taken as one
accounting period) beginning on January 1, 1997 and ending on the last day
of the most recently completed fiscal quarter, exceeds the aggregate
amount of dividends, if any, paid by the Borrower during such period
pursuant to, and to the extent allowed by, clause (i) of Section 8.10.
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"Agent" shall mean Bank of America, National Association, successor
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by merger to NationsBank N.A., in its capacity as Agent hereunder, and any
successor agent hereunder.
"Applicable Margin" shall mean (a) with respect to a Floating Rate
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Loan, an amount equal to one-half of one percent (0.50%), and (b) with
respect to a Eurodollar Loan, an amount equal to one and three-quarters
percent (1.75%).
"Availability Test Event" means any (i) purchase of an Additional
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Location pursuant to Section 8.3, (ii) payment of a dividend pursuant to
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clause (ii) of Section 8.10(b) or (iii) repurchase of any amount of Senior
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Subordinated Notes pursuant to Section 8.20.
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"Average Unused Availability" means, for any period, the average
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daily amount of Unused Availability for each Business Day during such
period.
"Blocked Accounts" shall have the meaning assigned to such term in
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Section 3.6.
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"Borrowing Date" shall mean a date on which a Eurodollar Loan is
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made hereunder.
"Borrowing Notice" shall have the meaning ascribed to such term in
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Section 2.11.
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"Business Day" shall mean (a) with respect to any borrowing, payment
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or rate selection of Eurodollar Loans, a day other than Saturday or Sunday
on which banks are open for business in Chicago, Illinois and on which
dealings in United States Dollars are carried in the London interbank
market and (b) for all other purposes, a day other than Saturday or Sunday
on which banks are open for business in Chicago, Illinois.
"Co-Agent" shall mean American National Bank and Trust Company of
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Chicago in its capacity as Co-Agent hereunder, and any successor co-agent
hereunder.
"Code" shall mean the Uniform Commercial Code of the State of Texas,
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as amended from time to time, and the Uniform Commercial Code applicable
in such other states as any Collateral may be located at any time.
"Collateral" shall mean all property and interests in property now
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owned or hereafter acquired by the Borrower or any other Person in or upon
which a security interest, lien or mortgage is granted to the Agent or any
Lender by the Borrower or such other Person in order to secure the
Liabilities, whether under this Agreement, the other Financing Agreements
or under any other documents, instruments or writings executed by the
Borrower or any other Person and delivered to the Agent or any Lender.
"Collateral Report" shall have the meaning assigned to such term in
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Section 3.1.
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"Collecting Banks" shall have the meaning assigned to such term in
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Section 3.6.
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"Corporate Base Rate" shall mean the prime or base rate of interest
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publicly announced from time to time by the Agent, whether or not such
rate is the best rate available. Any change in the Corporate Base Rate
shall be effective as of the effective date stated in the announcement by
the Agent of such change.
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 2
"Debt" means, without duplication, with respect to any Person (the
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"subject Person") all liabilities, obligations, and indebtedness of the
subject Person to any other Person, of any kind or nature, now or
hereafter owing, arising, due, or payable, howsoever evidenced, created,
incurred, acquired, or owing, whether primary, secondary, direct,
contingent, fixed, or otherwise, consisting of indebtedness for borrowed
money or the deferred purchase price of property, excluding trade
payables, but including, without in any way limiting the generality of the
foregoing: (a) in the case of the Borrower, the Liabilities; (b) all
indebtedness, liabilities, and obligations of any Person secured by any
Lien on the subject Person's property, even if the subject Person shall
not have assumed or become liable for the payment thereof; provided,
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however, that all such indebtedness, liabilities, and obligations which
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are limited in recourse to such property shall be included in Debt only to
the extent of the book value of such property as would be shown on a
balance sheet of the subject Person prepared in accordance with GAAP; (c)
all indebtedness, liabilities, and obligations created or arising under
any Capital Lease or conditional sale or other title retention agreement
with respect to property used or acquired by the subject Person, even if
the rights and remedies of the lessor, seller, or lender thereunder are
limited to repossession of such property; provided, however, that all such
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indebtedness, liabilities, and obligations which are limited in recourse
to such property shall be included in Debt only to the extent of the book
value of such property as would be shown on a balance sheet of the subject
Person prepared in accordance with GAAP; (d) all indebtedness,
liabilities, and obligations under guaranties of Debt; and (e) the present
value (discounted at the Corporate Base Rate) of lease payments due under
synthetic leases.
"Default" shall mean the occurrence or existence of any one or more
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of the following events: (a) the Borrower fails to pay any of the
Liabilities when such Liabilities are due, declared due or demanded; (b)
the Borrower or any guarantor of the Liabilities fails or neglects to
perform, keep or observe any of the covenants, conditions, promises, or
agreements contained in this Agreement or any of the other Financing
Agreements, and in the case of failure or neglect to perform, keep or
observe any of the covenants, conditions, promises or agreements contained
in Sections 7.1 (solely with respect to the Borrower's obligations to keep
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its books or records and accounts in accordance with GAAP), 7.3, 7.4, 7.8
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or 7.11, such failure or neglect shall continue for ten (10) days after an
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officer of the Borrower located in Beloit, Wisconsin learns thereof or ten
(10) days after the Agent provides the Borrower with written notice
thereof; (c) any written warranty or representation heretofore, now or
hereafter made by the Borrower, or any guarantor of the Liabilities in
connection with this Agreement or any of the other Financing Agreements is
untrue or incorrect in any material respect, or any information contained
in any schedule, certificate, statement, report, financial data, notice,
or writing furnished at any time by the Borrower to the Agent or any
Lender is untrue or incorrect in any material respect, on the date as of
which the facts set forth therein are stated or certified; (d) judgments
or orders requiring aggregate payments in excess of one Hundred Thousand
Dollars ($100,000), for which the Borrower's insurer has not admitted
liability, in writing, or assumed the continued defense in the case where
the judgment arises, shall be rendered against the Borrower and such
judgments or orders shall remain unsatisfied or undischarged and in effect
for thirty (30) consecutive days without a stay of enforcement or
execution; (e) a notice of lien, levy, or assessment is filed or recorded
with respect to ten percent (10%) or more of the Collateral by the United
States, or any department, agency or instrumentality thereof, or by any
state, county, municipality or other governmental agency or any taxes or
debts owing at any time or times hereafter to any one or more of them
become a lien upon ten percent (10%) or more of the Collateral; provided,
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that this clause (e) shall not apply to any liens, levies, or assessments
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which the Borrower or its Subsidiary is contesting in good faith (provided
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the Borrower or its Subsidiary has complied with the provisions of clauses
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(a) and (b) of Section 7.4) or which relate to current taxes not yet due
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and payable; (f) ten percent (10%) or more of the assets of the Borrower,
or of the Borrower and its Subsidiaries taken as a whole, or the
Collateral is attached, seized, subjected to a writ or distress warrant,
or is levied upon, or comes within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors and on or
before the thirtieth (30th) day thereafter such assets are not returned to
the Borrower or the owner thereof, as applicable, and/or such writ,
distress warrant or levy is not dismissed, stayed or lifted; (g) a
proceeding under any bankruptcy, reorganization, arrangement of debt,
insolvency, readjustment of debt or receivership law or statute is filed
against the Borrower, any of its Subsidiaries or any guarantor of the
Liabilities and such proceeding remains undismissed and unstayed for a
period of sixty (60) days, or a proceeding under any bankruptcy,
reorganization, arrangement of debt, insolvency or receivership law or
statute is filed by the Borrower, any of its Subsidiaries or any guarantor
of the Liabilities, or the Borrower, any of its Subsidiaries or any
guarantor of the Liabilities makes an assignment for the benefit of
creditors, or the
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 3
Borrower, any of its Subsidiaries or any guarantor of the Liabilities
authorizes any of the foregoing by proper corporate action, as applicable;
(h) the Borrower or any of its Subsidiaries voluntarily or involuntarily
dissolves or is dissolved; (i) the Borrower, any of its Subsidiaries or
any guarantor of the Liabilities becomes insolvent or fails generally to
pay its debts as they become due; (j) the Borrower, any of its
Subsidiaries or any guarantor of the Liabilities is enjoined, restrained,
or in any way prevented by the order of any court or any administrative or
regulatory agency from conducting all or any material part of the business
affairs of the Borrower or of the Borrower and its Subsidiaries taken as a
whole; provided, that the affected business affairs of any other guarantor
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of the Liabilities have a direct impact upon the business affairs of the
Borrower or of the Borrower and its Subsidiaries taken as a whole; (k) a
breach by the Borrower, any of its Subsidiaries or any guarantor of the
Liabilities shall occur under any material agreement, document or
instrument (other than an agreement, document or instrument evidencing the
lending of money), whether heretofore, now or hereafter existing between
the Borrower, any of its Subsidiaries or such guarantor and any other
Person, and such breach shall continue beyond any applicable cure period
contained in such agreement, document or instrument; provided, that with
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respect to any guarantor of the Liabilities, such agreement, document or
instrument pertains to the business affairs of the Borrower; (1) a breach
by the Borrower, any of its Subsidiaries or any guarantor of the
Liabilities shall occur under any written agreement, document or
instrument evidencing the lending of money, except for trade payables and
normal accruals arising in the ordinary course of business which are not
evidenced by any promissory note or similar written instrument, with
respect to which the aggregate principal balance is equal to or greater
than Two Hundred Thousand Dollars ($200,000), whether theretofore, now or
hereafter existing between the Borrower, any of its Subsidiaries or such
guarantor and any other Person, and the effect thereof would be to permit
the acceleration of the indebtedness thereunder; provided, that with
respect to any guarantor of the Liabilities, such written agreement,
document or instrument pertains to the business affairs of the Borrower
and provided further, that the Default created by this clause (1) shall
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exist only for so long as the relevant indebtedness may be accelerated;
(m) any guarantor of the Liabilities shall terminate or revoke the
obligations of such guarantor under the applicable guarantee agreement or
breach any of the terms of such guarantee agreement or any of the other
Financing Agreements to which such guarantor is a party; (n) a breach
shall occur under the Subordination Agreement, or a breach or default
shall occur under the Senior Subordinated Notes or the Indenture; (o)
there shall occur any loss, theft, substantial damage or destruction of
any item or items of Collateral (a "Loss") if (i) the amount of such Loss
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with respect to which an insurer has not admitted liability, in writing,
within a reasonable time after the occurrence of such Loss, exceeds Two
Hundred Fifty Thousand Dollars ($250,000) in the aggregate or (ii) any
such Loss results in an interruption of the business of the Borrower or
any of its Subsidiaries (which shall conclusively be presumed to concern
more than one (1) business location of the Borrower or its Subsidiaries)
which is not, in the Agent's reasonable discretion, adequately covered by
business interruption insurance; (p) the Borrower, any of its Subsidiaries
or any guarantor of the Liabilities shall be indicted for any crime for
which forfeiture of a material amount of its or his property is a
potential penalty; (q) Xxxxxxx X. Xxxxxxxxx or his wife, their personal
representatives and estates, cumulatively shall cease to own either
directly or indirectly less than fifty-one percent (51%) of the Borrower's
outstanding voting securities; and (r) a material and adverse change shall
occur in the business, operations or financial condition of the Borrower
or of the Borrower and its Subsidiaries taken as a whole, or a material
and adverse change shall occur in the financial condition or the business
affairs pertaining to the Borrower or of the Borrower and its Subsidiaries
taken as a whole or of any other guarantor of the Liabilities.
"EBITDA" means net income before interest, taxes, depreciation and
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amortization, determined on a consolidated basis for the Borrower and its
Subsidiaries in accordance with GAAP.
"Eligible Accounts" shall have the meaning assigned to such term in
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Section 3.2.
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"Eligible Inventory" shall have the meaning assigned to such term in
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Section 3.10.
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"Environmental Laws" shall mean all federal, state and local
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laws, statutes, rules, regulations, ordinances, programs, permits,
guidances, orders and consent decrees relating to health, safety and
environmental matters applicable to the business and property of the
Borrower and its Subsidiaries. Such laws and regulations include but
are not limited to the Resource Conservation and Recovery Act, 42
U.S.C. ss.6901 et seq., as amended; the Comprehensive Environmental
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Response, Compensation and Liability Act ("CERCLA"),
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THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 4
42 U.S.C. ss.9601 et seq., as amended; the Toxic Substance Act, 15 U.S.C.
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ss.2601 et seq., as amended; the Clean Water Act, 33 U.S.C. ss.466 et
-- --- --
seq., as amended; the Clean Air Act, 42 U.S.C. ss.7401 et seq., as
--- -- ---
amended; state and federal superlien and environmental cleanup programs;
and U.S. Department of Transportation regulations.
"Environmental Notice" shall mean any summons, citation, directive,
--------------------
information request, notice of potential responsibility, notice of
violation or deficiency, order, claim, complaint, investigation,
proceeding, judgment, letters or other written communication, actual or
threatened, from the United States Environmental Protection Agency or
other federal, state or local agency or authority, or any other entity or
individual, public or private, concerning any intentional or unintentional
act or omission which involves Management of Hazardous Substances on or
off the property and is received by an officer or center manager of the
Borrower; the imposition of any lien on property, including but not
limited to liens asserted by government entities in connection with
Responses to the presence or Release of Hazardous Substances; any alleged
violation of or responsibility under Environmental Laws; and, after due
inquiry and investigation, any knowledge of any facts which could give
rise to any of the above is received or obtained by an officer or center
manager of the Borrower.
"Equipment" shall mean all of the Borrower's machinery, equipment,
---------
fixtures, Rolling Stock and other tangible personal property, other than
Inventory, whether located on the Borrower's premises or located
elsewhere, together with any and all accessions, parts and appurtenances
thereto, whether presently owned or hereafter acquired by the Borrower.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended.
"ERISA Affiliate" shall mean each trade or business, including the
---------------
Borrower, whether or not incorporated, which together with the Borrower
would be treated as a single employer under Section 4001 of ERISA.
"Eurodollar Base Rate" shall mean, with respect to a Eurodollar Loan
--------------------
for the relevant Eurodollar Interest Period, the rate of interest per
annum (rounded upwards, if necessary, to the nearest one-one hundredth of
one percent (1/100 of 1.0%) appearing on Telerate Page 3750 (or any
successor page) as the London interbank offered rate for deposits in
United States dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Eurodollar Interest Period
for a term comparable to such Eurodollar Interest Period. If for any
reason such rate is not available, the term "Eurodollar Base Rate" shall
mean, with respect to any Eurodollar Loan for a particular Eurodollar
Interest Period, the rate of interest per annum (rounded upwards, if
necessary, to the nearest one-one hundredth of one percent (1/100 of 1.0%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate
for deposits in United States dollars at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Eurodollar Interest
Period for a term comparable to such Eurodollar Interest Period, provided,
--------
that if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates. As used
herein, "Telerate Page 3750" refers to the British Bankers Association
Libor Rates (determined at 11:00 a.m. (London time) that are published by
Dow Xxxxx Telerate, Inc.
"Eurodollar Interest Period" shall mean, with respect to a
--------------------------
Eurodollar Loan, a period of one (1), two (2), three (3), four (4), six
(6) or twelve (12) months commencing on a Business Day selected by the
Borrower pursuant to this Agreement. Such Eurodollar Interest Period shall
end on (but exclude) the day which corresponds numerically to such date
one (1), two (2), three (3), four (4), six (6) or twelve (12) months
thereafter, provided, that if there is no such numerically corresponding
day in such first (lst), second (2nd), third (3rd), fourth (4th), sixth
(6th) or twelfth (12) succeeding month, such Eurodollar Interest Period
shall end on the last Business Day of such first (lst), second (2nd),
third (3rd), fourth (4th), sixth (6th) or twelfth (12th) succeeding month.
If a Eurodollar Interest Period would otherwise end on a day which is not
a Business Day, such Eurodollar Interest Period shall end on the next
succeeding Business Day, provided, that if said next succeeding Business
Day falls in a new month, such Eurodollar Interest Period shall end on the
last preceding Business Day.
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 5
"Eurodollar Loan" shall mean the portion of the Revolving Loans
---------------
which bears interest at a Eurodollar Rate.
"Eurodollar Rate" shall mean, with respect to a Eurodollar Loan for
---------------
the relevant Eurodollar Interest Period, the sum of the Eurodollar Base
Rate applicable to that Eurodollar Interest Period plus the Applicable
Margin in effect at the beginning of such Eurodollar Interest Period.
"Event of Default" shall mean an event which through the passage of
----------------
time or the service of notice or both would (assuming no action is taken
by the Borrower to cure the same) mature into a Default.
"Existing Loan Agreement" shall have the meaning specified for such
-----------------------
term in the recitals to this Agreement.
"Financials" shall have the meaning assigned to such term in Section
---------- -------
6.4.
---
"Financing Agreements" shall mean this Agreement and all other
--------------------
agreements, instruments and documents, including without limitation
security agreements, loan agreements, notes, guarantees, mortgages, deeds
of trust, subordination agreements, intercreditor agreements, pledges,
powers of attorney, consents, assignments, collateral assignments,
reimbursement agreements, contracts, leases, financing statements and all
other written matter whether heretofore, now, or hereafter executed by or
on behalf of the Borrower, any of its Affiliates or Subsidiaries or any
guarantor of the Liabilities and delivered to the Agent or any Lender,
together with all agreements and documents referred to therein or
contemplated thereby, as each may be amended, modified, supplemented or
extended from time to time, but shall exclude all agreements, instruments
and documents pertaining to loans made by any Lender to Xxxxxxx X.
Xxxxxxxxx, individually.
"Fixed Charge Coverage Ratio" means, as of the end of any calendar
---------------------------
month, determined for the Borrower and its Subsidiaries for the preceding
twelve (12) calendar months on a consolidated basis in accordance with
GAAP (other than the exclusion from such determination of any of the
following items used in such determination to the extent that it arises
with respect to a Subsidiary of the Borrower prior to the date such Person
becomes a Subsidiary of, or is consolidated with, the Borrower), the ratio
of (a) EBITDA to (b) the sum of (i) the amount of Net Interest Expense
paid in cash during such period plus (ii) the aggregate amount of all
----
principal payments made in cash with respect to Debt (other than principal
payments on Revolving Loans or repurchases of Senior Subordinated Notes
pursuant to Section 8.20) during such period plus (iii) the amount of Net
------------ ----
Capital Expenditures during such period, plus (iv) the amount of income or
----
franchise taxes paid in cash during such period, plus (v) the amount of
----
distributions to stockholders of the Borrower paid in cash during such
period pursuant to clause (b)(i) of Section 8.10.
------------- ------------
"Floating Rate" shall mean, with respect to a Floating Rate Loan, a
-------------
rate per annum equal to the sum of the Corporate Base Rate plus the
Applicable Margin, changing on the first day of the calendar month
following the effective date of any change in the Corporate Base Rate.
"Floating Rate Loan" shall mean the portion of the Revolving Loan
------------------
which bears interest at a Floating Rate.
"Funded Debt" means indebtedness that matures more than one year
-----------
from the date of creation thereof, or that is directly or indirectly
renewable or extendible at the option of such Person under a revolving
credit or similar arrangement obligating the payee to renew or extend
credit over a period of more than one year from the date of such creation,
determined on a consolidated basis for the Borrower and its Subsidiaries,
including current maturities of long term debt and short term debt
extendable beyond one year at the option of such Person. "Funded Debt"
includes, in any event, the unpaid balance of the Revolving Loans.
"GAAP" shall mean generally accepted accounting principles as used
----
by the Financial Accounting Standards Board, as in effect from time to
time, consistently applied.
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 6
"General Intangibles" shall mean all general intangibles, choses in
-------------------
action, causes of action and all other intangible personal property of the
Borrower of every kind and nature wherever located and whether presently
owned or hereafter acquired by the Borrower (other than Accounts),
including without limitation corporate or other business records,
inventions, designs, patents, patent applications, service marks, service
xxxx applications, trademarks, trademark applications, tradenames,
tradestyles, trade secrets, goodwill, registrations, computer software,
operational manuals, product formulas for industrial processes,
blueprints, drawings, copyrights, copyright applications, licenses,
license agreements, permits, operating rights and authorities to move
heavy equipment, franchises, customer lists, tax refunds, tax refund
claims and the like.
"Hazardous Substances" shall mean hazardous substances, hazardous
--------------------
wastes, hazardous waste constituents and reaction by-products, hazardous
materials, pesticides, oil and other petroleum products, and toxic
substances, including asbestos and PCBs, as those terms are defined
pursuant to Environmental Laws.
"Indenture" means the certain Indenture dated as of May 7, 1997
---------
among the Borrower, certain Subsidiaries of the Borrower and NorWest Bank
Minnesota, National Association, and any renewals, extensions,
modifications, amendments or restatements thereof, which governs the
Senior Subordinated Notes.
"Initial Term" shall have the meaning assigned to such term in
------------
Section 2.8.
-----------
"Inventory" shall mean any and all inventory and goods, including
---------
without limitation goods in transit, wheresoever located, whether now
owned or hereafter acquired by the Borrower, which are held for sale or
lease, furnished under any contract of service or held as raw materials,
work-in-process or supplies, and all materials used or consumed in the
Borrower's business, and shall include such property the sale or other
disposition of which has given rise to Accounts and which has been
returned to or repossessed or stopped in transit by the Borrower.
"Inventory Sublimit" shall have the meaning assigned to such term in
------------------
subsection 2.1(ii).
"Letters of Credit" shall have the meaning assigned to such term in
-----------------
Section 2.2.
-----------
"Liabilities" shall mean all of the Borrower's liabilities,
-----------
obligations and indebtedness to the Agent and/or any of the Lenders of any
and every kind and nature, whether heretofore, now or hereafter owing,
arising, due or payable and howsoever evidenced, created, incurred,
acquired, or owing, whether primary, secondary, direct, contingent, fixed
or otherwise (including obligations of performance) and whether arising or
existing under written agreement, oral agreement or by operation of law,
but only to the extent that the foregoing arises under or in connection
with the Borrower's indebtedness and obligations to the Agent and/or any
of the Lenders under this Agreement (including without limitation all
"Liabilities" defined by the Existing Loan Agreement and renewed and
continued hereunder) and the other Financing Agreements and the Borrower's
reimbursement obligations with respect to any Letter of Credit.
"Loan Account" shall have the meaning assigned to such term in
------------
Section 2.4.
-----------
"Loan Availability" shall have the meaning assigned to such term in
-----------------
Section 2.1.
-----------
"Manage" or "Management" shall mean to generate, handle,
------ ----------
manufacture, process, treat, store, use, re-use, refine, recycle, reclaim,
blend or burn for energy recovery, incinerate, accumulate speculatively,
transport, transfer, dispose of, release, threaten to release or abandon
Hazardous Substances.
"Maximum Facility" shall mean the maximum amount which the Lenders
----------------
have agreed to consider as a ceiling on the outstanding principal balance
of the Revolving Loans to be made and Letters of Credit to be issued under
this Agreement. The Maximum Facility shall be Two Hundred Fifty Million
Dollars ($250,000,000.00).
"Monthly Report" shall have the meaning assigned to such term in
--------------
Section 3.1.
-----------
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 7
"Multiemployer Plan" shall have the meaning assigned to such term in
------------------
Section 6.23.
------------
"Net Capital Expenditures" means, for any period, the aggregate
------------------------
amount of capital expenditures during such period, minus net proceeds of
-----
sale of fixed assets received in cash during such period, minus the
-----
aggregate amount of such capital expenditures (whether made during such
period or any prior period) which were financed during such period with
obligations other than the Revolving Loans, which aggregate amount may not
be less than zero.
"Net Interest Expense" means interest expense, including the portion
--------------------
of any payment with respect to a capital lease which is classified as
interest in accordance with GAAP, less interest income.
"Outstanding Senior Subordinated Notes" means Senior Subordinated
-------------------------------------
Notes other than Repurchased Senior Subordinated Notes.
"Overadvance" shall mean the amount, if any (determined upon the
-----------
funding of any Revolving Loan) by which the aggregate amount of all
Revolving Loans exceeds the Loan Availability.
"PBGC" shall have the meaning assigned to such term in Section 6.23.
---- ------------
"Person" shall mean any individual, sole proprietorship,
------
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, entity, party, or government
(whether national, federal, state, provincial, county, city, municipal or
otherwise, including without limitation any instrumentality, division,
agency, body or department thereof).
"Plan" shall have the meaning assigned to such term in Section 6.23.
---- ------------
"Post Test Event Period" means, with respect to any Availability
----------------------
Test Event, the period beginning on the Business Day following the
effective date of such Availability Test Event and ending sixty (60) days
thereafter.
"Post Test Event Shortfall" means, with respect to any Post Test
-------------------------
Event Period, the existence on any day during such period of Unused
Availability in an amount less than $25,000,000.
"Prohibited Transaction" shall have the meaning assigned to such
----------------------
term in Section 6.23.
------------
"Projections" shall mean, collectively, the consolidated and
-----------
consolidating projected financial statements of the Borrower and its
Subsidiaries delivered pursuant to Section 6.4 and those required to be
-----------
delivered to the Agent pursuant to Section 7.1. Each set of Projections
-----------
shall cover the two (2) year period immediately following the date
thereof, shall be prepared on a monthly basis for the first year of such
period and on an annual basis for the second year of such period, in a
form and manner reasonably satisfactory to the Agent, and shall be
reasonably satisfactory, in substance, to the Agent and the Lenders, and
shall include: (a) projected balance sheets, (b) projected cash flow
statements, (c) projected profit and loss statements, (d) projected
capital expenditures detailed by anticipated major expenditures and (e)
appropriate supporting details and statements of underlying assumptions.
"Pro Rata Share" shall mean the percentage interest of each of the
--------------
Lenders as indicated on the signature pages to this Agreement.
"Purchase Price" shall have the meaning assigned to such term in
--------------
Section 8.3.
"Release" shall mean any actual or threatened spilling, leaking,
-------
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of Hazardous Substances into the
environment, as "environment" is defined in CERCLA.
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 8
"Reportable Event" shall have the meaning assigned to such term in
----------------
Section 6.23.
------------
"Repurchased Senior Subordinated Notes" means Senior Subordinated
-------------------------------------
Notes that are held by Borrower following repurchase thereof not
prohibited by this Agreement.
"Requisite Lenders" shall mean Lenders having, in the aggregate, Pro
-----------------
Rata Shares of at least 66.67%.
"Respond" or "Response" shall mean any action taken pursuant to
------- --------
Environmental Laws to correct, remove, remediate, cleanup, prevent,
mitigate, monitor, evaluate, investigate or assess the Release of a
Hazardous Substance.
"Revolving Credit Notes" shall have the meaning assigned to such
----------------------
term in Section 2.1.
-----------
"Revolving Loans" shall have the meaning assigned to such term in
---------------
Section 2.1.
-----------
"Rolling Stock" shall mean the Borrower's forklifts, lift trucks,
-------------
motor vehicles, trailers and other Rolling Stock, whether located on the
Borrower's premises or located elsewhere together with any and all
accessions, parts and appurtenances thereto, including but not limited to
conveyors, booms, scissor beds and cranes, whether presently owned or
hereafter acquired by the Borrower.
"Senior Subordinated Notes" means the certain 10.625% Senior
-------------------------
Subordinated Notes due 2007, executed and issued by the Borrower in an
aggregate principal amount not exceeding One Hundred Million Dollars
($100,000,000.00) pursuant to the Indenture, and any and all renewals,
extensions, modifications, amendments or restatements thereof to the
extent accomplished in compliance with the prior consent of the Agent as
required by Section 8.18.
"Subordination Agreement" shall mean the Subordination Agreement
-----------------------
dated as of December 12, 1990, executed by GAF Corporation (or its
successors-in-interest) in favor of the Agent and the Lenders, and
consented to by the Borrower, as such agreement may be amended, modified
or reaffirmed from time to time.
"Subsidiary" shall mean any corporation of which more than fifty
----------
percent (50%) of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time stock of any other class or
classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time, directly or
indirectly, owned by the Borrower or any partnership or joint venture
of which more than fifty percent (50%) of the outstanding equity
interests are at the time, directly or indirectly, owned by the
Borrower. Subsidiary includes, without limitation, each of Mule-Hide
Products Co., Inc., a Texas corporation, Amcraft Building Products Co.,
Inc., a Delaware corporation, Vande Hey Roof Tile Installation, Inc., a
Delaware corporation and Vande Hey Raleigh Roof Tile Manufacturing,
Inc., a Delaware corporation, respectively, each wholly-owned by the
Borrower.
"Subordinated Seller Obligations" means purchase money obligations
-------------------------------
of the Borrower incurred in connection with the purchase of Additional
Locations (not exceeding the maximum amount permitted under Section 8.3)
to the extent such obligations are expressly made subject to a written
subordination agreement among the holder of such obligations, the
Borrower, the Agent and the Lenders, in form satisfactory to the Agent and
the Lenders, which provides (without limitation) that (i) such obligations
are subordinate in right of payment and claim in favor of all Liabilities
from time to time existing, (ii) the Borrower's obligation to pay, and
such holder's right to receive, payments of such obligations shall be
suspended upon written notice by the Agent to such holder and the
Borrower, which notice may be issued by the Agent at any time in its
discretion whether or not any Default or Event of Default is in existence,
(iii) in any event, prepayment of such obligations is prohibited without
the prior written consent of the Agent and the Lenders and (iv) such
holder may not exercise any remedies against the Borrower in respect of
collection or enforcement of such obligations until the Financing
Agreements have been terminated and all Liabilities have been paid in
full.
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 9
"Tax Code" shall have the meaning assigned to such term in Section
-------- -------
6.23.
----
"Term" shall have the meaning assigned to such term in Section 2.8.
---- -----------
"Unused Availability" means, at any time, the amount by which Loan
-------------------
Availability at such time exceeds the sum of (i) the unpaid balance of
Revolving Loans at such time plus (ii) the aggregate undrawn face amount
of the Letters of Credit outstanding at such time.
1.2 Accounting Terms. Any accounting terms used in this Agreement
----------------
which are not specifically defined herein shall have the meanings customarily
given them in accordance with GAAP.
1.3 Others Defined in Code. All terms contained in this Agreement
----------------------
(and which are not otherwise specifically defined herein) shall have the
meanings provided by the Code to the extent the same are used or defined
therein.
1.4 Effect of Amendment and Restatement. Upon the execution and
-----------------------------------
delivery of this Agreement, the obligations of the Borrower to repay the loans
and advances arising under the Existing Loan Agreement shall be renewed by this
Agreement and shall continue in full force and effect and the liens and security
interests securing payment thereof shall be renewed and continued by this
Agreement and shall continue in full force and effect, but shall now be governed
by the terms of this Agreement and each of the other Financing Agreements
(exclusive of the Existing Loan Agreement).
2. CREDIT.
------
2.1 Revolving Loans. Provided there does not then exist a Default or
---------------
an Event of Default, and subject to the provisions of Section 4, each Lender
---------
will, from time to time, up to and including the last day of the Initial Term
or, if extended pursuant to Section 2.8, any subsequent Term, upon the
-----------
Borrower's request made in the manner set forth in Section 4.1, advance to the
-----------
Borrower on a revolving credit basis (the "Revolving Loans") such Lender's Pro
---------------
Rata Share of an aggregate amount equal to up to the lesser of (a) the Maximum
Facility, less the aggregate undrawn face amount of the then outstanding Letters
of Credit and (b) an amount equal to (i) Loan Availability less (ii) the
aggregate undrawn face amount of the then outstanding Letters of Credit. As used
herein, "Loan Availability" at any time shall mean the sum of the following:
-----------------
(1) up to eighty-five percent (85%) of the face amount (less maximum
discounts, credits and allowances which may be taken by or granted to
Account Debtors in connection therewith) then outstanding under existing
Eligible Accounts at such time, less such reserves as the Agent in its
sole discretion elects to establish; plus
----
(2) up to the lesser of (x) an amount equal to (i) sixty percent
(60%) during the period beginning July 1 of each calendar year and
continuing through November 30 of such year or (ii) sixty-five percent
(65%) during the period beginning December 1 of each calendar year through
and including June 30 of the following calendar year, of Eligible
Inventory, less such reserves as the Agent in its sole discretion elects
to establish and (y) the Inventory Sublimit. The "Inventory Sublimit" (a)
------------------
at any time during the period from December 1 of each year through and
including June 30 of the following year, shall be an amount equal to sixty
percent (60.0%) of the aggregate amount of Revolving Loans outstanding at
any such time, and (b) at any time during the period from July 1 of each
year through and including November 30 of such year, shall be an amount
equal to fifty percent (50.0%) of the aggregate amount of Revolving Loans
outstanding at any such time.
Each Lender irrevocably agrees that it shall make its Pro Rata share of each
Revolving Loan available to the Agent in accordance with the terms of this
Agreement. Payments made by the Agent to any Person on account of any Letter of
Credit shall constitute Revolving Loans hereunder, the proceeds of which shall
be used to reimburse the Agent for such payments. Each advance to the Borrower
under this Section 2.1 shall be in integral multiples of Five Thousand Dollars
-----------
($5,000) (other than Revolving Loans created by payment on a Letter of Credit)
and shall, on the day of such advance, be
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 10
deposited, in immediately available funds, in the Borrower's demand deposit
account with the Agent, or in such other account as the Borrower may, from time
to time, designate. The indebtedness of the Borrower under this Section 2.1
-----------
shall be evidenced by revolving credit notes of even date herewith issued by the
Borrower to the Lenders in the form attached hereto as Exhibit A (the "Revolving
--------- ---------
Credit Notes"). The provisions of the Revolving Credit Notes notwithstanding,
------------
the Liabilities evidenced by the Revolving Credit Notes shall become immediately
due and payable upon the earlier to occur of (A) the last day of the Initial
Term or, if extended pursuant to Section 2.8, any subsequent Term and (B) the
-----------
acceleration of the Liabilities.
2.2 Letters of Credit. Provided there does not then exist a Default
-----------------
or an Event of Default, and subject to the provisions of Section 4, the Agent
---------
may, in its sole discretion, from time to time, up to and including the
seventy-fifth (75th) day before the last day of the Initial Term or, if extended
pursuant to Section 2.8, any subsequent Term, issue upon the Borrower's request
-----------
and for the Borrower's account, irrevocable standby and documentary letters of
credit (collectively, the "Letters of Credit"). The aggregate undrawn face
-----------------
amount of outstanding Letters of Credit (a) shall not at any time exceed Twenty
Million Dollars ($20,000,000) and (b) shall serve to reduce the amount otherwise
available for Revolving Loans. Payments made by the Agent to any Person on
account of any Letter of Credit shall constitute Revolving Loans hereunder, the
proceeds of which shall be used to reimburse the Agent for such payments. No
Letter of Credit shall have an expiry date later than the last day of the
Initial Term or. any renewal Term, if applicable. Applications for the issuance
of Letters of Credit must be received by the Agent, in a form satisfactory to
the Agent, at least three (3) Business Days prior to the requested issuance date
thereof. It is expressly understood and agreed by the Borrower that nothing
contained in this Agreement shall, at any time, require the Agent to issue
Letters of Credit and the issuance of such Letters of Credit shall at all times
be in the Agent's sole discretion. The Borrower hereby agrees to protect,
indemnify, pay and save the Agent harmless from ]and against any and all claims,
actions, causes of action, judgments, suits, obligations, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable attorneys'
fees and disbursements) which it may incur or be subject to as a consequence,
direct or indirect, of the issuance of the Letters of Credit, or any drawing or
purported drawing thereunder, other than as a result of the gross negligence or
willful misconduct of the Agent. Except for the Agent's gross negligence or
willful misconduct, the Borrower shall assume all risks of the acts, omissions
or misuse of the Letters of Credit by the beneficiaries thereof. Except for the
Agent's gross negligence or willful misconduct, the Agent shall not be
responsible: (a) for the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with the
application for and issuance of the Letters of Credit, even if it should in fact
prove to be in any or all aspects invalid, insufficient, inaccurate, fraudulent
or forged; (b) for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign the Letters of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason; (c) for errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(d) for errors in interpretation of technical terms; (e) for any loss or delay
in the transmission or otherwise of any document required in order to make a
drawing under the Letters of Credit or of the proceeds thereof; and (f) for any
consequences arising from causes beyond the control of the Agent.
2.3 Principal Balance of Liabilities Not to Exceed the Maximum
----------------------------------------------------------
Facility. The sum of the aggregate outstanding principal balance of the
--------
Revolving Loans made under this Agreement and the aggregate face amount of the
outstanding Letters of Credit shall not, at any given time, exceed the lesser of
(a) the Maximum Facility or (b) an amount equal to the sum of (i) Loan
Availability at such time plus (ii) the amount of any Overadvance to the limited
----
extent allowed by Agent in its discretion pursuant to Section 11.9(b). The
---------------
Borrower agrees that if at any time any such excess shall arise, the Borrower
shall promptly pay to the Agent, for the account of the Lenders, such amount as
may be necessary to eliminate such excess. The Borrower further agrees that if
at any time the Inventory Sublimit or any of the other limits or ratios
contained in Section 2.1 or 2.2 are exceeded, the Borrower shall promptly pay to
----------- ---
the Agent, for the account of the Lenders, such amount as may be necessary to
eliminate such excess.
2.4 Borrower's Loan Account. The Agent shall maintain a loan account
-----------------------
(the "Loan Account") on its books in which shall be recorded (a) all Revolving
------------
Loans made by the Lenders, or the Agent for the account of the Lenders, to the
Borrower pursuant to this Agreement, (b) all payments made by the Borrower on
all such Revolving Loans and (c) all other appropriate debits and credits as
provided in this Agreement or any of the other Financing Agreements, including
without limitation all fees, charges, expenses and interest. All entries in the
Borrower's Loan Account shall be made in accordance with the Agent's customary
accounting practices pursuant to GAAP as in effect from time to
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 11
time. The Borrower promises to pay the amount reflected as owing by it under its
Loan Account and all of its other obligations hereunder as such amounts become
due or are demanded or declared due pursuant to the terms of this Agreement.
2.5 Statements. All Revolving Loans to, and Letters of Credit issued
----------
for the benefit of, the Borrower, and all other debits and credits provided for
in this Agreement or any of the other Financing Agreements, shall be evidenced
by entries made by the Agent in its internal data control systems showing the
date, amount and reason for each such debit or credit. Until such time as the
Agent shall have rendered to the Borrower written statements of account as
provided herein, the balance in the Borrower's Loan Account, as set forth on the
Agent's most recent computer printout, shall be rebuttably presumptive evidence
of the amounts due and owing the Agent and the Lenders by the Borrower. From
time to time, the Agent shall render to the Borrower a statement setting forth
the balance of the Borrower's Loan Account, including principal, interest,
expenses and fees. Each such statement shall be subject to subsequent adjustment
by the Agent but shall, absent manifest errors or omissions, be rebuttably
presumed correct and to that extent binding upon the Borrower and shall
constitute an account stated unless, within thirty (30) days after receipt of
any statement from the Agent, the Borrower shall deliver to the Agent written
objection thereto specifying the error or errors, if any, contained in such
statement.
2.6 Interest and Fees.
-----------------
(1) The Borrower shall pay to the Agent, for the account of the
Lenders, interest on the outstanding principal balance of (i) the Floating Rate
Loan at the Floating Rate and (ii) the Eurodollar Loan at the applicable
Eurodollar Rate. Notwithstanding the foregoing, upon the written election by the
Agent, following the occurrence and during the continuance of any Default, the
Borrower shall pay to the Agent, for the account of the Lenders, interest on the
outstanding principal balance of the Revolving Loans at the per annum rate of
two percent (2.0%) plus the interest rate then in effect under this Agreement
(the "Default Rate"). Interest shall be payable monthly in arrears on the first
------------
day of each calendar month commencing April 1, 2002, and shall be computed on
the basis of a year of three hundred sixty (360) days for the actual number of
days elapsed.
(2) Subject to Section 2.10, on the signing of this Agreement the
------------
Borrower shall pay to the Agent, for the benefit of the Lenders, a closing fee
in an amount equal to one-eighth of one percent (0.125%) of the Maximum Facility
calculated as of the date of this Agreement (such fee, the "Closing Fee"). The
-----------
Closing Fee will be shared pro rata among the Lenders.
(3) Subject to Section 2.10, the Borrower shall pay to the Agent,
------------
for the account of the Lenders, an unused facility fee equal to one-fourth
percent (0.25%) per annum of the amount by which the Maximum Facility exceeds
the sum of the average outstanding Revolving Loans during the immediately
preceding calendar month plus the average aggregate undrawn face amount of the
Letters of Credit issued and outstanding during the immediately preceding
calendar month, computed on the basis of a year of three hundred sixty (360)
days for the actual number of days elapsed, which shall be payable monthly in
arrears on the first day of each calendar month commencing April 1, 2002.
(4) Subject to Section 2.10, the Borrower shall pay to the Agent,
------------
for the account of the Lenders, a Letter of Credit fee equal to one percent
(1.00%) per annum of the average aggregate undrawn face amount of the Letters of
Credit issued and outstanding during the immediately preceding calendar month,
computed on the basis of a year of three hundred sixty (360) days for the actual
number of days elapsed. In addition, the Borrower will pay to the Agent, for its
own account, the Agent's customary issuance and processing charges and fees for
letters of credit. All of the foregoing fees and charges shall be payable
monthly in arrears on the first day of each calendar month commencing [April] 1,
2002. Upon the written election of the Agent, following the occurrence and
during the continuance of a Default, the Letter of Credit fee shall be charged
at the per annum rate of three percent (3.00%) of the average aggregate undrawn
face amount of the Letters of Credit issued and outstanding during the
immediately preceding calendar month.
(5) Subject to Section 2.10, as a monthly servicing fee to the Agent
------------
(i) the Borrower shall pay to the Agent, for its own account, a monthly
servicing fee, payable monthly in arrears on the last day of each calendar
month, of $7,083.33 per month.
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 12
2.7 Method for Making Payments. All payments that the Borrower is
--------------------------
required to make to the Agent or the Lenders under this Agreement or under any
of the other Financing Agreements shall be made in immediately available funds
not later than 1:00 p.m. (Chicago, Illinois time) on the date of payment at the
Agent's office at 231 X. XxXxxxx St., 16th Floor, Mail Code IL1-231-16-33,
Xxxxxxx, XX 00000, or at such other place as the Agent directs from time to
time, or in the Agent's sole discretion, by appropriate debits to the Loan
Account. Payments made after 1:00 p.m. (Chicago, Illinois time) shall be deemed
to have been made on the next succeeding Business Day.
2.8 Term of this Agreement. Subject to all other terms and
----------------------
conditions hereof, this Agreement shall be effective until June 30, 2005 (the
"Initial Term") and shall automatically extend for successive one year periods
------------
(each a "Term") of one year (each extending through the next succeeding June 30)
----
unless terminated by the Borrower or the Agent or any of the Lenders by written
notice of intention to terminate this Agreement as of the end of the Initial
Term or any such Term, as the case may be, which, in order to be effective, must
be delivered to all other parties to this Agreement at least sixty (60) days
prior to the end of the Initial Term or any such Term, as the case may be.
Following timely delivery of any such notice, unless otherwise agreed in writing
by the Borrower, the Agent and all the Lenders, this Agreement shall terminate
as of the expiration of the Initial Term or any such Term, as the case may be,
provided that (a) all of the Agent's and each of the Lenders' rights and
remedies under this Agreement and (b) the security interests reaffirmed and
created under Section 5.1 and under any of the other Financing Agreements, shall
-----------
survive any such termination until all of the Liabilities under this Agreement
and the other Financing Agreements have been paid in full. In addition, the
Agent may at any time demand repayment of the Liabilities and the Liabilities
may be accelerated as set forth in Section 9.1. Upon the effective date of
-----------
termination, all of the Liabilities shall become immediately due and payable
without notice or demand. Notwithstanding any termination, until all of the
Liabilities hereunder shall have been fully paid and satisfied, the Agent shall
be entitled to retain its security interests, for the benefit of the Lenders, in
and to all existing and future Collateral and the Borrower shall continue to
remit collections of Accounts and proceeds as provided herein.
2.9 Optional Prepayments. The Borrower may, at its option, prepay at
--------------------
any time during the Initial Term or any subsequent Term all or any portion of
the Liabilities. Subject to Section 2.10 and the requirements of Section
------------ -------
2.11(c), prepayments of a portion of the Liabilities may be made by the Borrower
-------
without incurring a premium or prepayment.
2.10 Limitation on Charges. In no contingency or event whatsoever
---------------------
shall the amount of interest under the Financing Agreements paid by Borrower,
received by Agent or Lenders, agreed to be paid by Borrower, or requested or
demanded to be paid by Agent, exceed the maximum rate of interest permitted from
day to day by any applicable state or federal law (the "Maximum Rate"). In the
------------
event any such sums paid by Borrower would exceed the Maximum Rate, such excess
amount shall automatically be applied to any unpaid principal or, if the amount
of such excess exceeds said unpaid principal, such excess shall be paid to
Borrower. All sums paid, or agreed to be paid, by Borrower which are or
hereafter may be construed to be compensation for the use, forbearance, or
detention of money shall be amortized, prorated, spread and allocated in respect
of the Liabilities throughout the full term of this Agreement until the
Liabilities are paid in full. Notwithstanding any provisions contained in the
Financing Agreements, or in any notes or other related documents executed
pursuant hereto, Agent and Lenders shall never be entitled to receive, collect
or apply as interest any amount in excess of the Maximum Rate and, in the event
Agent or Lenders ever receive, collect, or apply any amount that otherwise would
be in excess of the Maximum Rate, such amount shall automatically be deemed to
be applied in reduction of the unpaid principal balance of the Liabilities and,
if such principal balance is paid in full, any remaining excess shall forthwith
be paid to Borrower. In determining whether or not the interest paid or payable
under any specific contingency exceeds the Maximum Rate, Borrower and Agent
shall, to the maximum extent permitted under applicable law, (i) characterize
any non-principal payment as a standby fee, commitment fee, prepayment charge,
delinquency charge or reimbursement for a third-party expense rather than as
interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii)
amortize, prorate, allocate and spread in equal parts throughout the entire
period during which the indebtedness was outstanding the total amount of
interest at any time contracted for, charged or received. Nothing herein
contained shall be construed or so operate as to require Borrower to pay any
interest, fees, costs, or charges greater than is permitted by applicable law.
Subject to the foregoing, Borrower hereby agrees that the actual effective rate
of interest from time to time existing with respect to loans under this
Agreement, taking into account all amounts agreed to by Borrower or charged or
received by Lenders or Agent under the Financing Agreements which
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 13
may be deemed to be interest under applicable law, shall be deemed to be a rate
which is agreed to and stipulated by Borrower, Lenders and Agent in accordance
with applicable law.
2.11 Method of Selecting Rate Options; Additional Provisions
-------------------------------------------------------
Regarding Eurodollar Loans.
--------------------------
(1) Except as otherwise provided herein, the Borrower may select a
Eurodollar Rate with respect to any Revolving Loans permitted under this
Agreement and as provided by this Section 2.11; provided, that no more than
------------
twelve (12) Eurodollar Interest Periods may be in existence at any one time; and
provided, further, that at all times the amount of the Floating Rate Loans shall
-------- -------
be sufficient so that application of the proceeds of Accounts in accordance with
Section 3.6 will not necessitate a payment of the Eurodollar Loan on a day other
-----------
than the last day of the applicable Eurodollar Interest Period. Revolving Loans
shall bear interest at the Floating Rate unless the Borrower provides a
Borrowing Notice to the Agent and each Lender in the form of Exhibit F (a
---------
"Borrowing Notice"), signed by a duly authorized officer of the Borrower,
----------------
irrevocably electing that a portion of the Revolving Loans is to bear interest
at a Eurodollar Rate. The Borrowing Notice shall be delivered to the Agent and
each Lender not later than three (3) Business Days before the Borrowing Date for
each Eurodollar Loan, and shall specify:
(1) the Borrowing Date of such proposed Eurodollar Loan, which shall
be a Business Day;
(2) the aggregate amount of such proposed Eurodollar Loan, each of
which shall be in the minimum principal amount of Three Million Dollars
($3,000,000) and in integral multiples of One Million Dollars ($1,000,000); and
(3) the Eurodollar Interest Period applicable thereto.
Each Eurodollar Loan shall bear interest from and including the first day of the
Eurodollar Interest Period applicable thereto to (but not including) the last
day of such Eurodollar Interest Period at the interest rate determined as
applicable to such Eurodollar Loan, but interest on such Eurodollar Loan shall
be payable as provided in subsection 2.6(a). If at the end of a Eurodollar
-----------------
Interest Period for an outstanding Eurodollar Loan the Borrower has failed to
elect to continue such Eurodollar Loan as a Eurodollar Loan by providing an
appropriate Borrowing Notice to the Agent and each Lender as set forth above,
then such Eurodollar Loan shall be converted to a Floating Rate Loan on and
after the last day of such Eurodollar Interest Period. An outstanding Floating
Rate Loan may be converted to a Eurodollar Loan at any time subject to the
notice provisions and the limitations set forth above. The Borrower may not
select a Eurodollar Rate for a portion of the Revolving Loans if there exists a
Default or an Event of Default. The Borrower shall select Eurodollar Interest
Periods with respect to Eurodollar Loans so that no Eurodollar Interest Period
expires after the end of the Initial Term or, if extended pursuant to Section
-------
2.8, any subsequent Term.
---
(2) If any Lender determines that maintenance of a Eurodollar Loan
would violate any applicable law, rule, regulation or directive, whether or not
having the force of law, such Lender shall suspend the availability of the
Eurodollar Rate option and require any Eurodollar Loans owing to it to be
converted to a Floating Rate Loan; or if any Lender determines that (i) deposits
of a type or maturity appropriate to match fund Eurodollar Loans are not
available, such Lender shall suspend the availability of the Eurodollar Rate
option after the date of any such determination, or (ii) the Eurodollar Rate
does not accurately reflect the cost of making a Eurodollar Loan, such Lender
shall suspend the availability of the Eurodollar Rate option after the date of
any such determination.
(3) If any payment of a Eurodollar Loan occurs on a date which is
not the last day of the applicable Eurodollar Interest Period, whether because
of acceleration, prepayment or otherwise, or a Eurodollar Loan is not made on
the date specified by the Borrower because the Borrower has not satisfied the
conditions precedent to such Eurodollar Loan contained in this Agreement or has
otherwise breached the terms of this Agreement, the Borrower will indemnify the
Lenders for any loss or cost incurred by any of them resulting therefrom,
including without limitation any loss or cost in liquidating or employing
deposits acquired to fund or maintain the Eurodollar Loan, provided, however,
-------- -------
that each Lender, as applicable, shall to the extent practical, notify the
Borrower of any expected loss or cost in advance and attempt in good faith to
mitigate or avoid any such loss or cost.
(4) A Lender shall deliver a written statement as to the amount due,
if any, under paragraph (c) above. Such written statement shall set forth in
reasonable detail the calculations upon which the Lender determined such
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 14
amount and shall be presumed correct. Determination of amounts payable under
such paragraph in connection with a Eurodollar Loan shall be calculated as
though the Lender funded its Eurodollar Loan through the purchase of a deposit
of the type and maturity corresponding to the deposit used as a reference in
determining the Eurodollar Rate applicable to such Revolving Loan whether in
fact that is the case or not. Unless otherwise provided herein, the amount
specified in the written statement shall be payable on demand after receipt by
the Borrower of the written statement.
2.12 Yield Protection. If in the reasonable interpretation of the
----------------
Agent or any Lender the adoption of any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) after the date hereof, or any change therein after
the date hereof, or any change in the interpretation or administration thereof
after the date hereof, or the compliance of the Agent or any Lender therewith
after the date hereof,
(a) subjects the Agent or any Lender to any tax, duty, charge, fee,
deduction or withholding on or from payments due from the Borrower
(excluding taxation of the overall net income of the Agent or the
Lenders), or changes the basis of taxation of payments to the Agent or any
Lender in respect of the Financing Agreements or other amounts due it
hereunder, or
(b) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended
by, the Agent or any Lender, or
(c) imposes or increases or renders applicable any special deposit,
assessment, insurance charge, reserve or liquidity or other similar
requirement (whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by the Agent or any
Lender, or
(d) imposes any other condition the result of which is to increase
the cost to the Agent or any Lender of making, funding or maintaining
advances or reduces any amount receivable by the Agent or any Lender in
connection with advances, or requires the Agent or any Lender to make any
payment calculated by reference to the amount of advances held or interest
received by it, by an amount deemed material by the Agent or such Lender,
or
(e) affects the amount of capital required or expected to be
maintained by the Agent or any Lender or any corporation controlling the
Agent or any Lender and the Agent or such Lender determines the amount of
capital required is increased by or based upon the existence of this
Agreement or its obligation to make loans hereunder or of commitments of
this type,
then, within fifteen (15) days of demand by the Agent or any Lender, the
Borrower shall pay the Agent or such Lender that portion of such increased
expense incurred (including, in the case of clause (e), any reduction in the
----------
rate of return on capital to an amount below that which it could have achieved
but for such law, rule, regulation, policy, guideline or directive and after
taking into account the Agent's or such Lender's policies as to capital
adequacy) or reduction in an amount received which the Agent or such Lender
determines is attributable to making, funding and maintaining the Financing
Agreements; provided, that the Borrower shall not be liable for any portion of
--------
such increased expense incurred or reduction in such amount received by the
Agent or any Lender unless the Agent or such Lender notifies the Borrower of
such increased expense or reduction in amount received within ninety (90) days
of the date the Agent or such Lender actually learns of such increased expense
or reduction in amount received; provided, further, that in the event the
-------- -------
Borrower objects to such increased expense, the Borrower may prepay the
Liabilities, terminate this Agreement, and, in such event, the Borrower shall
incur no prepayment penalty as described in Section 2.9.
-----------
3. REPORTING AND ELIGIBILITY REQUIREMENTS/COLLATERAL.
-------------------------------------------------
3.1 Reports. The Borrower shall submit to the Agent, not later than
-------
the last day of each month, a report (the "Monthly Report"), accompanied by a
--------------
certificate in the form attached hereto as Exhibit B, which shall be signed by
---------
the Borrower's president or treasurer or such other officers as the Agent may
reasonably approve from time to time. The Monthly Report shall include, as of
the last Business Day of the preceding month: (a) an aged trial balance of
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 15
Accounts (the "Accounts Trial Balance") indicating which Accounts remain unpaid
----------------------
thirty (30), sixty (60) and ninety (90) days past the invoice date thereof,
based on end-of-the-month agings, and listing the names of all applicable
Account Debtors; (b) a reconciliation of Inventory and Accounts in the forms
attached hereto as Exhibit C; (c) a schedule of Inventory valued at rolling
---------
average FIFO cost (the "Schedule of Inventory") and separately listing (i) the
---------------------
total value of all Inventory owned by the Borrower and in the Borrower's
possession, listed by location (noting therein any such locations that are
consignment locations), (ii) all Inventory owned by the Borrower and in the
possession of any public warehouseman or other bailee (and specifying the amount
of Inventory at each such location) and (iii) all obsolete and slow-moving
Inventory if requested by the Agent; (d) an aging with respect to accounts
payable if requested by the Agent; (e) the outstanding principal balance of the
Liabilities (which representation regarding the balance of the Liabilities will
not, in any event, be binding on the Agent or any Lender); (f) a listing of all
outstanding guarantees, if any, of the Borrower and its Subsidiaries; and (g) if
requested by the Agent, a schedule listing the payments due by the Borrower
during the prior month to taxing authorities and listing by location the
payments due by the Borrower during the prior month to real estate lessors,
public warehousemen and bailees of the Borrower's Inventory and the due dates of
all such payments, together with a representation by the Borrower concerning
whether all such payments have been made on or before their respective due dates
(and if so requested by the Agent, copies of canceled checks, receipts or other
reasonably satisfactory evidence that such payments were made).
In addition, (i) at least once during each calendar week, provided that
--------
Unused Availability exceeds $25,000,000 or (ii) on each Business Day on which
Unused Availability is equal to or less than $25,000,000 or (iii) in any event,
on each Business Day if required by Agent at any time, from time to time, in its
discretion, the Borrower shall provide the Agent with a written report in the
form of Exhibit D hereto (the "Collateral Report") signed by the Borrower's
--------- -----------------
president or treasurer or such other officers as the Agent may reasonably
approve from time to time, describing, in a form and with such specificity as is
satisfactory to the Agent, all Eligible Accounts created or acquired by the
Borrower subsequent to the immediately preceding Collateral Report, and all
changes to Eligible Inventory on a monthly basis or on such shorter periodic
basis as the Agent may require from time to time. The Collateral Report shall
also contain a calculation of Loan Availability based on the most current
information with regard to Eligible Accounts and Eligible Inventory. The
Borrower shall furnish copies of any other reports or information, in a form and
with such specificity as is reasonably satisfactory to the Agent, concerning
Accounts and Inventory included, described or referred to in the Collateral
Reports and any other documents in connection therewith requested by the Agent,
including without limitation, but only if specifically requested, copies of all
invoices and purchase orders prepared in connection with such Accounts and
Inventory. The Collateral Reports shall also include, in a form and with such
specificity as is reasonably satisfactory to the Agent, information on all
amounts collected by the Borrower on Accounts collected by the Borrower
subsequent to the immediately preceding Collateral Report. The Collateral
Reports shall also contain such additional information as the Agent shall
reasonably require.
3.2 Eligible Accounts. The Agent shall have the sole right, in its
-----------------
discretion, to determine which Accounts are eligible ("Eligible Accounts"). In
-----------------
addition, without limiting the Agent's discretion, unless otherwise agreed by
the Agent in writing, the following Accounts are not Eligible Accounts: (a)
Accounts which remain unpaid more than sixty (60) days from the stated due date
or more than 120 days from the invoice date, in each case based upon the
end-of-the-month aging; (b) all Accounts owing by a single Account Debtor,
including currently scheduled Accounts, if fifty percent (50%) or more of the
balance owing by such Account Debtor to the Borrower is ineligible for any
reason; (c) Accounts with respect to which the Account Debtor is a director,
officer, employee, Subsidiary or Affiliate of the Borrower; (d) Accounts with
respect to which the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless the Borrower assigns its
right to payment of such Accounts to the Agent pursuant to, and in full
compliance with, the Assignment of Claims Act of 1940, as amended; (e) Accounts
with respect to which the Account Debtor is not a resident of the United States;
(f) Accounts in dispute or with respect to which the Account Debtor has asserted
in writing or either the Borrower or the Agent has reason to believe the Account
Debtor is entitled to assert a counterclaim or has asserted in writing or either
the Borrower or the Agent has reason to believe the Account Debtor is entitled
to assert a right of setoff; (g) Accounts with respect to which the prospect of
payment or performance by the Account Debtor is or will be impaired, as
determined by the Agent in the exercise of its discretion; (h) Accounts with
respect to which the Agent does not have a first and valid fully perfected
security interest; (i) Accounts with respect to which the Account Debtor is the
subject of bankruptcy or a similar insolvency proceeding or has made an
assignment for the benefit of creditors or whose assets have been conveyed to a
receiver or trustee; (j) Accounts with respect to which the Account Debtor's
obligation to pay the Account is conditional upon the Account Debtor's approval
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 16
or is otherwise subject to any repurchase obligation or return right, as with
sales made on a xxxx-and-hold, guaranteed sale, sale-and-return, sale on
approval or consignment basis; (k) Accounts to the extent that the Account
Debtor's indebtedness to the Borrower exceeds a credit limit determined by the
Agent in the Agent's discretion; (1) Accounts with respect to which the Account
Debtor is located in New Jersey, Minnesota, Tennessee or Indiana unless the
Borrower (i) has received a certificate of authority to do business, and is in
good standing, in such state, or (ii) has filed a Notice of Business Activities
Report (or other comparable required report) with the proper authorities of such
state for the then current year; (m) Accounts which arise out of sales not made
in the ordinary course of the Borrower's business; (n) Accounts with respect to
which the Account Debtor has returned to the Borrower all or any portion of the
Inventory the sale of which gave rise to such Accounts; and (o) Accounts with
respect to which any document or agreement executed or delivered in connection
therewith, or any procedure used in connection with any such document or
agreement, fails in any material respect to comply with the requirements of
applicable law, or with respect to which any representation or warranty
contained in this Agreement is untrue. If the Borrower determines that a
previously scheduled Eligible Account ceases to be an Eligible Account under any
of the above described criteria, the Borrower shall notify the Agent thereof at
the earliest reasonable opportunity.
3.3 Account Warranties. With respect to Accounts scheduled, listed
------------------
or referred to on the initial Accounts Trial Balance, on any subsequent Accounts
Trial Balance or on any Collateral Report or Monthly Report, the Borrower
warrants and represents to the Agent and each Lender that: (a) it is the lawful
owner of such Accounts and it has the right to subject such Accounts to a
security interest in favor of the Agent, for the benefit of the Lenders; (b)
they are genuine, are in all respects what they purport to be, and are not
evidenced by a judgment; (c) they represent undisputed, bona fide transactions
completed in accordance with the terms and provisions contained in the documents
delivered to the Agent with respect thereto; (d) the amounts shown on the
respective Accounts Trial Balance, the respective Collateral Report or Monthly
Report, the Borrower's books and records, and all invoices and statements which
may be delivered to the Agent with respect thereto, are actually and absolutely
owing to the Borrower and are not in any way contingent; (e) no payments have
been or shall be made thereon except payments immediately delivered to the Agent
pursuant to this Agreement; (f) there are no setoffs, counterclaims or disputes
asserted, or, to the best of the Borrower's knowledge, existing, with respect
thereto and the Borrower has not made any agreement with any Account Debtor for
any deduction therefrom except a discount or allowance allowed by the Borrower
in the ordinary course of its business for prompt payment; (g) there are no
facts, events or occurrences of which the Borrower has knowledge which in any
way impair the validity or enforcement thereof or tend to reduce the amount
payable thereunder as shown on the respective Accounts Trial Balance, the
respective Collateral Report or Monthly Report, the Borrower's books and
records, and all invoices and statements delivered to the Agent with respect
thereto; (h) to the best of the Borrower's knowledge, all Account Debtors have
the capacity to contract and are solvent; (i) the services furnished and/or
goods sold giving rise thereto were not, at the time of sale by the Borrower to
any Account Debtor, subject, to any lien, claim, encumbrance or security
interest except that of the Agent, for the benefit of the Lenders, and except as
specifically permitted below; (j) the Borrower has no knowledge of any fact or
circumstance which would tend to impair the validity or collectibility thereof;
(k) to the best of the Borrower's knowledge, there are no proceedings or actions
which are threatened or pending against any Account Debtor which might result in
any material adverse change in such Account Debtor's financial condition; and
(1) such Accounts satisfy the objective criteria for inclusion as Eligible
Accounts set forth in Section 3.2.
-----------
3.4 Verification of Accounts. The Agent shall have the right, at any
------------------------
time or times hereafter, in the Agent's name or in the name of a nominee of the
Agent, to verify the validity, amount or any other matter relating to any
Accounts, by mail, telephone, telegraph or otherwise. The Agent shall promptly
notify the Borrower of the commencement of a verification process; provided,
--------
that it is understood and agreed that the Agent shall not be required to specify
which Accounts of the Borrower are to be verified.
3.5 Account Covenants. With respect to those Accounts with an
-----------------
aggregate balance in excess of Two Hundred Fifty Thousand Dollars ($250,000),
the Borrower shall, upon an officer of the Borrower located in Beloit, Wisconsin
learning thereof, promptly: (a) inform the Agent in writing of any material
delay in the Borrower's performance of any of its obligations to any Account
Debtor or of any assertion of any claims, offsets or counterclaims by any
Account Debtor; (b) furnish to and inform the Agent of all material adverse
information relating to the financial condition of any Account Debtor; and (c)
notify the Agent in writing if any of its then existing Accounts scheduled to
the Agent with respect to which the Lenders have made advances, are no longer
Eligible Accounts.
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 17
3.6 Collection of Accounts and Payments. Upon the request of the
-----------------------------------
Agent from time to time the Borrower shall establish accounts (the "Blocked
-------
Accounts") in the Borrower's name with a financial institution or institutions
--------
reasonably acceptable to the Agent, to which the Borrower will immediately
deposit all payments made with respect to Accounts or for Inventory or services
provided by the Borrower in the identical form in which such payment was made,
whether by cash or check. Each financial institution with which a Blocked
Account is established shall acknowledge and agree, in a manner satisfactory to
the Agent, that the amounts on deposit in such Blocked Account are the sole and
exclusive property of the Agent, for the account of the Lenders, that such
financial institution has no right to setoff (except for NSF or "stop payment"
checks or other returned items) against the Blocked Account, and that such
financial institution will wire, or otherwise transfer in immediately available
funds in a manner satisfactory to the Agent, funds deposited in the Blocked
Account on a daily basis as such funds are collected. The Borrower agrees that
all payments received by the Agent, whether in respect of the Accounts or as
proceeds of other Collateral or otherwise, will be applied on account of the
Liabilities upon final collection. The Borrower and any Affiliates,
shareholders, directors, officers, employees, agents or those Persons acting for
or in concert with the Borrower shall, acting as trustee for the Agent, receive
any monies, checks, notes, drafts or any other payment relating to and/or
proceeds of Accounts, Inventory or other Collateral which come into the
possession or under the control of the Borrower or any Affiliates, shareholders,
directors, officers, employees, agents or those Persons acting for or in concert
with the Borrower, and immediately upon receipt thereof shall remit the same or
cause the same to be remitted, in kind, to the Blocked Accounts or as set forth
below. Upon the occurrence and during the continuation of a Default or an Event
of Default, the Borrower shall upon the direction of the Agent direct all of the
Borrower's Account Debtors to direct payments of Accounts to post office boxes
maintained by a financial institution selected by the Agent (the "Collecting
----------
Banks") pursuant to an agreement satisfactory to the Agent. The Collecting Banks
-----
will agree that all payments made to such post office boxes shall be deposited
to the Blocked Accounts in a manner satisfactory to the Agent. The Collecting
Banks will also agree that the amounts deposited in the post office boxes are
the sole and exclusive property of the Agent, for the benefit of the Lenders,
and that such Collecting Banks have no right to setoff against such amounts. The
Borrower agrees to pay to the Agent any and all fees, costs and expenses which
the Agent incurs in connection with opening and maintaining the post office
boxes maintained by the Collecting Banks and the Blocked Accounts and depositing
for collection by the Agent any check or item of payment received and/or
delivered to the Agent on account of the Liabilities. At the direction of the
Agent given at any time in the discretion of the Agent, the Borrower will cause
all payments made with respect to Accounts or for Inventory to be remitted
directly to accounts held in the name of the Agent at Bank of America, National
Association.
3.7 Appointment of the Agent as the Borrower's Attorney-in-Fact. The
-----------------------------------------------------------
Borrower hereby irrevocably designates, makes, constitutes and appoints the
Agent (and all Persons designated by the Agent) as the Borrower's true and
lawful attorney-in-fact, and authorizes the Agent, in the Borrower's or the
Agent's name, to do the following: (i) at any time after the occurrence of a
Default (a) demand payment of Accounts; (b) enforce payment of Accounts by legal
proceedings or otherwise; (c) exercise all of the Borrower's rights and remedies
with respect to proceedings brought to collect any Account; (d) sell or assign
any Account upon such terms, for such amount and at such time or times as the
Agent deems advisable; (e) settle, adjust, compromise, extend or renew any
Account; (f) discharge and release any Account; (g) prepare, file and sign the
Borrower's name on any proof of claim in bankruptcy or other similar document
against any Account Debtor; (h) notify the post office authorities to change the
address for delivery of the Borrower's mail to an address designated by the
Agent, have access to any lock box or postal box into which any of the
Borrower's mail is deposited, and open and dispose of all mail addressed to the
Borrower; (i) endorse the Borrower's name upon any chattel paper, document,
instrument, invoice or similar document or agreement relating to any Account or
any goods pertaining thereto; and (j) do all acts and things which are
necessary, in the Agent's reasonable discretion, to fulfill the Borrower's
obligations under this Agreement; and (ii) at any time, (x) take control in any
manner of any item of payment or proceeds thereof; (y) endorse the Borrower's
name upon any items of payment or proceeds thereof and deposit the same in the
Agent's account on account of the Liabilities; and (z) sign the Borrower's name
on any verification of Accounts and notices thereof to Account Debtors.
3.8 Chattel Paper and Instruments. Immediately upon the Borrower's
-----------------------------
receipt thereof, the Borrower shall deliver or cause to be delivered to the
Agent, with appropriate endorsement and assignment to vest title, with full
recourse to the Borrower, and possession in the Agent, all chattel paper and
instruments which the Borrower now owns or may at any time or times hereafter
acquire.
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 18
3.9 Notice to Account Debtors. The Agent may, in its sole
-------------------------
discretion, at any time or times after the occurrence of a Default, and without
prior notice to the Borrower, notify any or all Account Debtors that the
Accounts have been assigned to the Agent, for the benefit of the Lenders, that
the Agent, for the benefit of the Lenders, has a security interest therein, and
that all payments upon the Accounts be made directly to the Agent or any account
designated by the Agent.
3.10 Eligible Inventory. The Agent shall have the sole right, in its
------------------
discretion, to determine which Inventory is eligible ("Eligible Inventory").
------------------
Without limiting the Agent's discretion, unless otherwise agreed by the Agent in
writing, the following Inventory is not Eligible Inventory: (a) Inventory which
is in transit; (b) Inventory which is not either currently usable or currently
salable in the ordinary course of the Borrower's business; (c) Inventory which
is obsolete or slow-moving; (d) Inventory which the Agent determines, in the
exercise of its discretion and in accordance with the Agent's customary business
practices, to be unacceptable due to age, type, category and/or quantity; (e)
Inventory with respect to which the Agent does not have a first and valid fully
perfected security interest; (f) Inventory which is stored with a bailee,
consignee, warehouseman or similar third party, unless the Borrower has (i)
previously complied with the terms of Section 3.13 with respect to such stored
------------
Inventory and (ii) received satisfactory Uniform Commercial Code searches of the
Borrower's name at such location; and (g) Inventory as to which any
representation or warranty contained in this Agreement is untrue. If the
Borrower determines that previously scheduled Inventory ceases to be Eligible
Inventory under any of the above described criteria, the Borrower shall notify
the Agent thereof at the earliest reasonable opportunity.
3.11 Inventory Warranties. With respect to Inventory scheduled,
--------------------
listed or referred to in any Monthly Report or Collateral Report, the Borrower
warrants that, except to the extent that the Borrower has otherwise notified the
Agent in writing (a) it is the lawful owner of such Inventory and has the right
to subject such Inventory to a security interest in favor of the Agent, for the
benefit of the Lenders; (b) it is located on one of the premises listed on
Schedule 3.11 and is not in transit; (c) it is not subject to any lien or
-------------
security interest whatsoever except for the security interests granted to the
Agent, for the benefit of the Lenders, hereunder and except as specifically
permitted below; (d) it is of good and merchantable quality, free from any
defects which would affect the market value of such Inventory; and (e) it
satisfies the objective criteria for inclusion as Eligible Inventory set forth
in Section 3.10.
------------
3.12 Inventory Records. The Borrower shall maintain a perpetual
------------------
inventory system which, with reasonable accuracy, tracks all of the Borrower's
Inventory and with reasonable accuracy itemizes and describes the kind, type,
quantity and value of Inventory and of Eligible Inventory, the Borrower's cost
therefor and daily withdrawals therefrom and additions thereto, all of which
records shall be available during the Borrower's usual business hours at the
request of any of the Agent's or any Lender's officers, employees or agents. In
addition, the Borrower shall conduct a physical count of the Inventory at least
once each calendar year and following each physical inventory, shall supply the
Agent with a report in a form and with such specificity as may be reasonably
satisfactory to the Agent concerning such physical count of the Inventory.
3.13 Safekeeping of Inventory and Inventory Covenants. Neither the
-------------------------------------------------
Agent nor any Lender shall be responsible for: (a) the safekeeping of the
Inventory; (b) any loss or damage to the Inventory; (c) any diminution in the
value of the Inventory; or (d) any act or default of any carrier, warehouseman,
bailee, forwarding agency or any other Person. All risk of loss, damage,
destruction or diminution in value of the Inventory shall be borne by the
Borrower absent the gross negligence or willful misconduct of the Agent or any
Lender. No Inventory shall be stored with a bailee, warehouseman, consignee or
similar third party unless the Borrower first (i) obtains the Agent's written
consent which shall not be unreasonably withheld and (ii) furnishes to the Agent
such agreements, instruments and documents as the Agent shall in its sole
discretion specify with respect to such stored Inventory, including without
limitation any negotiable warehouse receipts or other documents of title. The
Borrower shall not sell any Inventory to any customer on a xxxx-and-hold basis.
The Borrower shall notify the Agent if the Borrower has on its premises for
processing or otherwise, inventory or other goods owned by other Persons and the
Borrower agrees to keep all such inventory and goods segregated from the
Borrower's own Inventory.
3.14 Equipment Warranties. With respect to the Equipment, the
---------------------
Borrower warrants that, (a) except as disclosed on Schedule 3.14, it is owned by
-------------
the Borrower and is located on one of the premises listed on Schedule 3.11,
-------------
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 19
(b) it is not subject to any lien or security interest whatsoever except for the
liens and security interests specifically permitted below, and (c) it is in
working condition and repair and is currently used or usable in the Borrower's
business.
3.15 Equipment Records. The Borrower shall at all times hereafter
------------------
keep reasonably correct and accurate records itemizing and describing the kind,
type, age and condition of the Equipment, the Borrower's cost therefor and
accumulated depreciation thereon; and retirements, sales, or other dispositions
thereof, all of which records shall be available during the Borrower's usual
business hours at the request of any of the Agent's or any Lender's officers,
employees or agents.
3.16 Safekeeping of Equipment. Neither the Agent nor any Lender
-------------------------
shall be responsible for: (a) the safekeeping of the Equipment; (b) any loss or
damage to the Equipment; (c) any diminution in the value of the Equipment; or
(d) any act or default of any repairman, bailee or any other Person with respect
to the Equipment. All risk of loss, damage, destruction or diminution in value
of the Equipment shall be borne by the Borrower absent the gross negligence or
willful misconduct of the Agent.
3.17 Real Property. The Borrower represents and warrants that all of
--------------
the real property owned by the Borrower is disclosed on Schedule 3.17(a) and
----------------
that all of the real property leased to the Borrower is disclosed on Schedule
--------
3.17(b).
-------
3.18 Maintenance of Properties. Unless otherwise consented to by the
--------------------------
Agent in writing, which consent shall not be unreasonably withheld, the Borrower
shall and shall cause its Subsidiaries to maintain or cause to be maintained in
good repair, working order and condition, ordinary wear and tear excepted, all
of the material assets and properties now or hereafter owned, leased or
otherwise possessed by it and shall make or cause to be made all needful and
proper repairs, renewals, replacements and improvements thereto.
4. CONDITIONS OF ADVANCES.
----------------------
Notwithstanding any other provisions contained in this Agreement, the
making of any Revolving Loan or the issuance of any Letter of Credit provided
for in this Agreement shall be conditioned upon the following:
4.1 The Borrower's Request. The Agent shall have received, by no
----------------------
later than 2:00 p.m. (Chicago, Illinois time) on the day on which a Revolving
Loan (other than a Eurodollar Loan) is requested to be made hereunder, by no
later than 2:00 p.m. Chicago, Illinois time on the day which is three (3)
Business Days prior to the date on which any Eurodollar Loan is requested and by
no later than 2:00 p.m. (Chicago, Illinois time) on the third (3rd) Business Day
preceding the day on which a Letter of Credit is requested to be issued, (a) a
telephonic request from an officer of the Borrower (or any Person authorized by
the Borrower pursuant to a written list provided to the Agent), for a Revolving
Loan or a Letter of Credit in a specific amount, (b) copies of all reports and
documents not previously delivered but required to be delivered to the Agent
under this Agreement or any of the other Financing Agreements, and (c) in the
case of a Letter of Credit, an application therefor as described in Section 2.2.
-----------
Unless otherwise stated to the Agent in writing by the Borrower at the time of
any such request, each such request for a Revolving Credit Loan or Letter of
Credit shall automatically be deemed, without necessity of further certification
or ratification by the Borrower, to be a representation and warranty by the
Borrower to the Agent, for the benefit of the Lenders, that (i) all requirements
and conditions for the funding of any such Revolving Credit Loan or the issuance
of any such Letter of Credit, as provided by this Agreement, have been satisfied
and (ii) the funding of any such Revolving Credit Loan or the issuance of any
such Letter of Credit, and the resulting incurrence of indebtedness and
obligations in connection therewith, is permitted under the Indenture and would
not cause or otherwise result in a "Default" or "Event of Default" as defined by
the Indenture. The Agent shall have no liability to the Borrower or any other
Person as a result of acting on any telephonic request that the Agent believes
in good faith to have been made by any Person set forth on Schedule 4.1.
------------
4.2 Financial Condition. No material adverse change, as determined
-------------------
by the Agent in its sole discretion, in the business, financial condition or
operations of the Borrower shall have occurred at any time or times subsequent
to the most recent request for a Revolving Loan or Letter of Credit under this
Agreement.
4.3 No Default. Neither a Default nor an Event of Default shall have
----------
occurred and be continuing.
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 20
4.4 Other Requirements. The Agent shall have received, in form and
------------------
substance reasonably satisfactory to the Agent, all certificates, orders,
authorities, consents, affidavits, schedules, instruments, security agreements,
financing statements, mortgages, opinions and other documents which are provided
for hereunder or which the Agent may at any time reasonably request. Without
limitation of the foregoing, the Borrower shall have caused each of its
Subsidiaries to execute (i) a continuing unlimited guaranty agreement in favor
of the Agent, for the benefit of the Lenders, pursuant to which each such
Subsidiary shall guarantee the prompt payment and performance of the Liabilities
and all other obligations of the Borrower under the Financing Agreements and
(ii) a security agreement pursuant to which each such Subsidiary shall grant to
the Agent, for the benefit of the Lenders, a continuing first priority security
interest and lien in and to all property of the type or nature specified in
Section 5.1, at any time owned or acquired by such Subsidiary, as continuing
-----------
security for the Liabilities and for such Subsidiary's obligations under such
guaranty agreement, (iii) together with such financing statements as may be
required by the Agent, which in each case shall be in form and substance
satisfactory to the Agent and (iv) such documentation in respect of existence
and authorizing resolutions as the Agent may request, in each case in form and
substance satisfactory to the Agent and the Lenders.
4.5 Representations and Warranties. All of the representations and
------------------------------
warranties contained in this Agreement or any of the other Financing Agreements,
including without limitation those set forth in Section 6, shall be true and
correct as of the date the request for the Revolving Loan or Letter of Credit is
made, as though made on and as of such date.
5. COLLATERAL.
----------
5.1 Security Interest. To secure payment and performance in full of
-----------------
the obligations arising under the Existing Loan Agreement and the other
Financing Agreements defined therein, the Borrower previously granted to the
Agent, for the benefit of the Lenders, a right of setoff against and a
continuing security interest in and to certain of the Borrower's property and
interests in property, whenever acquired and wherever located (as set forth with
more specificity in the Existing Loan Agreement). The Borrower acknowledges that
such property and interests in property remain subject to a right of setoff
against and a continuing security interest of the Agent, for the benefit of the
Lenders (which rights and security interests were granted and continued pursuant
to, and as referenced in, the Existing Loan Agreement and related Financing
Agreements) and that all of such property and interests in property will
constitute Collateral for the Liabilities. Accordingly, the Borrower hereby
reaffirms the prior grant of a right of setoff against and a continuing security
interests in and to certain of the Borrower's property and interests in
property, as more specifically described below, whenever acquired and
wheresoever located, and, without limiting the foregoing, to secure payment and
performance in full of the Liabilities, the Borrower hereby grants to the Agent,
for the benefit of the Lenders, a right of setoff against and a continuing
security interest, collateral assignment and lien in and to the following
property and interests in property, whether now owned or hereafter owned or
acquired by the Borrower and wheresoever located: (a) Accounts, contract rights,
General Intangibles (including payment intangibles and intellectual property),
chattel paper, instruments, notes, letters of credit, letter of credit rights,
supporting obligations, warehouse receipts, shipping documents, documents and
documents of title; (b) Inventory; (c) Equipment; (d) deposit accounts (general
or special) with, and credits and other claims against, Agent or any Lender, or
any other financial institution with which the Borrower maintains deposits; (e)
investment property, money, and any and all other property and interests in
property of the Borrower now or hereafter coming into the actual possession,
custody or control of the Agent or any Lender or any agent or affiliate of the
Agent or any Lender in any way or for any purpose (whether for safekeeping,
deposit, custody, pledge, transmission, collection or otherwise); (f) interests
in leases of real or personal property, whether as lessor or lessee (including
any option to purchase thereunder); (g) all insurance proceeds of or relating to
any of the foregoing; (h) books and records relating to any of the foregoing and
to the Borrower's business; (i) the commercial tort claims described on Schedule
--------
5.1, and (j) all accessions and additions to, substitutions for, and
---
replacements, products and proceeds of any of the foregoing.
5.2 Preservation of Collateral and Perfection of Security Interests
---------------------------------------------------------------
Therein. The Borrower shall execute and deliver to the Agent, concurrently with
-------
the execution of this Agreement, and at any time or times hereafter at the
request of the Agent, all financing statements or other documents (and pay the
cost of filing or recording the same in all public offices deemed necessary by
the Agent) as the Agent may request, in a form satisfactory to the Agent, to
perfect and keep perfected the security interests in the Collateral granted by
the Borrower to the Agent, for the benefit of the
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 21
Lenders, herein and in the other Financing Agreements or to otherwise protect
and preserve the Collateral and the Agent's security interests therein. Without
limiting the foregoing, in the event the Borrower acquires any commercial tort
claim arising after the Closing Date with respect to which the aggregate amount
of the Borrower=s claim thereunder is reasonably expected to be in an amount
equal to or exceeding $100,000, the Borrower will notify the Agent, amend
Schedule 5.1 to reasonably describe such commercial tort claim and grant to the
------------
Agent, for the benefit of the Lenders, a security interest and lien in and to
such commercial tort claim as security for the Liabilities, in form and
substance satisfactory to the Agent. Should the Borrower fail to do so, the
Agent is authorized to sign any such financing statements as the Borrower's
agent. The Borrower further agrees that a carbon, photographic, photostatic or
other reproduction of this Agreement or of a financing statement is sufficient
as a financing statement. At any time or times on or after the occurrence of any
Default (whether or not any such Default is cured or waived), at the request of
the Agent the Borrower shall deliver to the Agent certificates of title for
Rolling Stock as the Agent, in its sole discretion, may request, together with
documentation necessary for the Agent to have its security interest and lien
recorded or otherwise noted thereon as may be required by any applicable statute
governing perfection of security interests and liens in such Collateral (it
being agreed that the Agent in its sole discretion may elect not to require
delivery of such certificates of title at any time on or after the occurrence of
any such Default without impairing the Agent's right to require such delivery at
any subsequent time as provided herein, whether or not any such Default is cured
or waived). At any time or times hereafter at the request of the Agent, the
Borrower shall execute and deliver to the Agent such instruments and documents
as the Agent, in its sole discretion, requests in order to protect and preserve
the Collateral and perfect and enforce the Agent's security interests therein,
for the benefit of the Lenders. The Borrower shall pay all costs of filing or
recording such instruments and documents in all public offices deemed necessary
by the Agent.
5.3 Loss of Value of Collateral. The Borrower shall immediately
---------------------------
notify the Agent of any material loss or depreciation in the value of the
Collateral, other than loss or depreciation occurring in the ordinary course of
the Borrower's business.
5.4 Cash Collateral. In the event that the Agent has issued any
---------------
Letters of Credit for the account of the Borrower, the Agent may, at any time
after (a) the occurrence of a Default or an Event of Default, (b) demand by the
Agent for payment of the Liabilities as provided in Section 9.1 hereof, (c)
-----------
there exists no unpaid principal balance of the Liabilities, (d) this Agreement
shall terminate for any reason pursuant to Section 2.8 above or (e) at any time,
-----------
the sum of (i) the outstanding principal balance of the Revolving Loans plus
----
(ii) the aggregate undrawn face amount of all Letters of Credit shall exceed
Loan Availability, request of the Borrower, and the Borrower shall thereupon
deliver to the Agent, cash collateral for any Letter of Credit issued for the
account of the Borrower. If the Borrower fails to deliver such cash to the Agent
promptly upon the Agent's request therefor, the Agent may, without limiting the
Agent's rights or remedies arising from such failure to deliver cash, retain, as
cash collateral, cash proceeds of the Borrower's Collateral in an amount equal
to the aggregate undrawn face amount of all Letters of Credit then outstanding.
To the extent that the Agent retains proceeds in accordance with the immediately
preceding sentence at any time any Liabilities are outstanding, the Agent shall
apply such cash and cash collateral to the payment of such Liabilities,
including without limitation to the payment of any or all of the Borrower's
reimbursement obligations with respect to any Letter of Credit. To the extent
that no Liabilities are outstanding at such time, the Agent may (but shall not
be obligated to) (y) invest the same in a savings account, under which deposits
are available for immediate withdrawal (provided no Event of Default or Default
--------
is in existence), with the Agent or such other bank as the Agent may, in its
sole discretion select, or (z) hold the same as a credit balance in an account
with the Agent in the Borrower's name. Interest payable on any such savings
account described in the foregoing sentence shall be collected by the Agent and
shall be paid to the Borrower as it is received by the Agent, less any fees
owing by the Borrower to the Agent with respect to any Letter of Credit and less
any amounts necessary to pay any of the Borrower's Liabilities which may be due
and payable at such time. The Agent shall have no obligation to pay interest on
any credit balances in any account opened for the Borrower pursuant to this
Agreement.
5.5 Agent Not Obligated or Liable. The Agent shall have no
-----------------------------
obligation whatsoever to the other Lenders or to any other Person to assure that
the Collateral exists or is owned by the Borrower or is cared for, protected or
insured or that the liens or security interests granted to the Agent, for the
benefit of the Lenders, herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise or continue exercising, any
of the rights, authorities and powers granted or available to the Agent in this
Agreement, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, the Agent may act in any manner it
may deem appropriate, in its sole discretion, given the Agent's own
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 22
interest in the Collateral as one of the Lenders; provided that the Agent shall
not engage in gross negligence or willful misconduct.
6. WARRANTIES.
----------
The Borrower represents and warrants to the Agent and to each of the
Lenders that as of the date of this Agreement, and continuing as long as any
Liabilities remain outstanding, and (even if there shall be no Liabilities
outstanding) as long as this Agreement remains in effect:
6.1 Corporate Existence. The Borrower and each of its Subsidiaries
-------------------
is a corporation duly organized and in good standing under the laws of the state
of its incorporation and is duly qualified as a foreign corporation and in good
standing under the laws of all other states where the nature and extent of the
business transacted by it or the ownership of its assets makes such
qualification necessary, except those states in which the failure to qualify
does not and will not have a material adverse effect on the business or
condition of such corporation, financial or otherwise. The state of
incorporation of the Borrower and its Subsidiaries and all states in which each
of the Borrower and its Subsidiaries is qualified to do business as of the date
hereof, are listed on Schedule 6.1 attached hereto.
------------
6.2 Corporate Authority. The execution and delivery by the Borrower
-------------------
and each of its Subsidiaries, as applicable, of this Agreement and all of the
other Financing Agreements and the performance of each such corporation of its
obligations hereunder and thereunder: (a) are within such corporation's
corporate powers; (b) are duly authorized by such corporation's Board of
Directors and, if necessary, such corporation's shareholders; (c) are not in
contravention of the terms of such corporation's Certificate or Articles of
Incorporation, as applicable, or By-Laws, or of any material indenture,
agreement or undertaking to which such corporation is a party or by which such
corporation or any of its property is bound; (d) do not, as of the execution
hereof, require any governmental consent, registration or approval; (e) do not
contravene any contractual or governmental restriction binding upon such
corporation (including without limitation the Indenture or any other material
agreement to which the Borrower is a party); and (f) will not, except as
contemplated herein, result in the imposition of any lien, charge, security
interest or encumbrance upon any property of such corporation under any existing
indenture, mortgage, deed of trust, loan or credit agreement or other material
agreement or instrument to which such corporation is a party or by which it or
any of its property may be bound or affected.
6.3 Binding Effect. This Agreement and all of the other Financing
--------------
Agreements are the legal, valid and binding obligations of the Borrower and each
of its Subsidiaries, as applicable, and are enforceable against the Borrower and
each of its Subsidiaries, as applicable, in accordance with their terms.
6.4 Financial Data. The Borrower has furnished to the Agent and each
--------------
Lender (a) its audited consolidated financial statements dated December 31,
2000; (b) its unaudited consolidated financial statements dated December 31,
2001; (c) statements of income, retained earnings, and cash flow of the Borrower
and its Subsidiaries for the month ending January 31, 2002; and (c) Projections
dated February 27, 2002 (covering only the period January 1, 2001 to and
including December 31, 2004) (collectively referred to as the "Financials"). All
----------
of the Financials (other than the Projections) have been, and all financial
statements to be furnished after the date hereof in accordance with Section 7.1
-----------
(other than the Projections) will be, prepared in accordance with the books and
records of the Borrower and its Subsidiaries and either fairly present or will
fairly present, as applicable, the consolidated and consolidating financial
condition of the Borrower and its Subsidiaries at the dates thereof and the
results of operations for the periods indicated (subject, in the case of
unaudited financial statements, to normal year-end adjustments). All of the
Financials have been, and all financial statements to be provided after the date
hereof will be, prepared in conformity with GAAP. The Projections furnished on
the date hereof have been, and the Projections to be furnished in accordance
with Section 7.1 will be, prepared by the Borrower and its financial personnel
-----------
in light of the past business of the Borrower and its Subsidiaries and represent
or will represent, as applicable, as of the date thereof, the good faith belief
of the Borrower and such personnel as to the most probable course of the
business of the Borrower and its Subsidiaries, subject to the assumptions and
qualifications stated therein. Absent a finding by the Agent of a material
adverse change in the business, financial condition or operations of the
Borrower and absent a breach of any of the financial covenants contained in this
Agreement, the failure by the Borrower to achieve any of the Projections will
not, in and of itself, constitute a Default. All information, reports and other
papers and data furnished or to be furnished to the Agent or any Lender have
been and
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 23
will be, at the time the same are so furnished to the Agent or any Lender,
accurate and correct in all material respects and complete insofar as necessary
to give the Agent and each Lender a true and accurate knowledge of the subject
matter thereof. Since the respective dates of the Financials, there has been no
material adverse change in the financial condition, results of operations or
business of the Borrower or of the Borrower and its Subsidiaries taken as a
whole.
6.5 Liens and Encumbrances; Locations. Except as disclosed on
---------------------------------
Schedule 6.5 attached hereto or as contemplated in Section 8.1, all of the
------------ -----------
Collateral of the Borrower and its Subsidiaries is and will continue to be owned
by the Borrower or a Subsidiary, has been fully paid for and is free and clear
of all security interests, liens, claims, and encumbrances. All Collateral is
and shall be kept only at the locations specified on Schedules 3.11 or 3.14 and
-------------- ----
such other locations as the Agent has received written notice of prior to the
placement of Collateral thereon.
6.6 Solvency. The Borrower and each of its Subsidiaries is solvent,
--------
is able to pay its debts as they become due and has capital sufficient to carry
on its business and all businesses in which it is about to engage, and now owns
property having a value both at fair valuation, and at present fair saleable
value, greater than the amount required to pay its debts, including without
limitation the Liabilities. The Eligible Inventory and Eligible Accounts
supporting the Revolving Loans to the Borrower are sufficient in value to
provide the Borrower with sufficient working capital and excess Loan
Availability to enable it to profitably operate its business, meet all debt
amortization requirements and perform its obligations under the Financing
Agreements and the other agreements evidencing indebtedness of the Borrower.
Neither the Borrower nor any of its Subsidiaries will be rendered insolvent by
the execution and delivery of any of the Financing Agreements or by completion
of the transactions contemplated hereunder or thereunder.
6.7 Principal Place of Business. The principal place of business and
---------------------------
chief executive office of the Borrower and each of its Subsidiaries is listed on
Schedule 6.7. The Borrower's federal tax identification number is 000000000. The
------------ ---------
Borrower's state organizational number is 2746500. If any change in such
-------
location occurs, the Borrower shall promptly notify the Agent thereof. As of the
date hereof, the books and records of the Borrower and each of its Subsidiaries
and all records of account are located at the principal place of business and
chief executive office of the Borrower or the appropriate Subsidiary, and if any
change in such location occurs, the Borrower shall promptly notify the Agent
thereof.
6.8 Other Corporate Names. Except as disclosed on Schedule 6.8
--------------------- ------------
attached hereto, neither the Borrower nor any of its Subsidiaries has used any
corporate or fictitious name (including any tradename, tradestyle, assumed name,
division name or any similar name), other than the corporate name shown on such
corporation's Certificate or Articles of Incorporation, as applicable.
6.9 Tax Liabilities. The Borrower and each of its Subsidiaries has
---------------
filed all federal, state and local tax reports and returns required by any law
or regulation to be filed by it, except for extensions duly obtained, and has
either duly paid all taxes, duties and charges indicated due on the basis of
such returns and reports, or made adequate provision for the payment thereof,
and the assessment of any material amount of additional taxes in excess of those
paid and reported is not reasonably expected.
6.10 Loans. Except as disclosed on Schedule 6.10 attached hereto,
----- -------------
and except for trade payables and normal accruals arising in the ordinary course
of the Borrower's business since the date of the latest financial statements
delivered to the Agent and the Lenders pursuant to Section 7.1, neither the
-----------
Borrower nor any of its Subsidiaries is obligated on any loan or other
indebtedness for borrowed money in excess of Twenty-Five Thousand Dollars
($25,000) as to any single such item or Fifty Thousand Dollars ($50,000) in the
aggregate.
6.11 Margin Securities. Neither the Borrower nor any of its
-----------------
Subsidiaries owns any margin securities and none of the Revolving Loans advanced
hereunder will be used for the purpose of purchasing or carrying any margin
securities or for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase any margin securities or for any other purpose
not permitted by Regulation U of the Board of Governors of the Federal Reserve
System. If requested by any Lender, the Borrower will furnish such Lender with a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in said Regulation. The Borrower also warrants that no part of the
proceeds of the loans to be made hereunder will be used by it for any purpose
which violates, or which is inconsistent with, the provisions of Regulation X of
said Board of Governors.
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 24
6.12 Subsidiaries; Joint Ventures; Partnerships. The Borrower has no
------------------------------------------
Subsidiaries other than Mule-Hide Products Co., Inc., a Texas corporation,
Amcraft Building Products Co., Inc., a Delaware corporation, Vande Hey Roof Tile
Installation, Inc., a Delaware corporation and Vande Hey Raleigh Roof Tile
Manufacturing, Inc., a Delaware corporation, respectively, each of which is a
wholly-owned Subsidiary of the Borrower. The Borrower is not engaged in any
joint venture or partnership with any other Person.
6.13 Litigation and Proceedings. Except as disclosed on Schedule
-------------------------- --------
6.13 attached hereto, no judgments are outstanding against the Borrower or any
----
of its Subsidiaries, nor is there now pending or, to the best of the Borrower's
knowledge, threatened, any litigation, contested claim, or federal, state or
municipal governmental proceeding by or against the Borrower or any of its
Subsidiaries, except judgments and pending or threatened litigation, contested
claims and governmental proceedings which are not, in the aggregate, material to
the financial condition, results of operations or business of the Borrower or of
the Borrower and its Subsidiaries taken as a whole.
6.14 Other Agreements. Except as disclosed on Schedule 6.14 attached
---------------- -------------
hereto, neither the Borrower nor any of its Subsidiaries is in default under any
agreement, contract, lease, or commitment to which it is a party or by which it
is bound, the breach of which could be material to the financial condition,
results of operations or business of the Borrower or of the Borrower and its
Subsidiaries taken as a whole. The Borrower knows of no dispute regarding any
agreement, contract, lease, or commitment which is material to the continued
financial success and well-being of the Borrower or of the Borrower and its
Subsidiaries taken as a whole.
6.15 Employee Controversies. Except as disclosed on Schedule 6.13 or
---------------------- -------------
Schedule 6.15 attached hereto, (a) there are no controversies pending or, to the
-------------
best of the Borrower's knowledge, threatened, between the Borrower or any of its
Subsidiaries and any of their respective employees, other than employee
grievances arising in the ordinary course of business which are not, in the
aggregate, material to the continued financial success and well-being of the
Borrower or of the Borrower and its Subsidiaries taken as a whole, (b) the
Borrower and each of its Subsidiaries is in material compliance with all federal
and state laws respecting employment and employment terms, conditions and
practices and (c) neither the Borrower nor any of its Subsidiaries has any union
representation questions, grievances, discrimination or unfair labor practice
complaints pending or threatened against it which are, in the aggregate,
material to the continued financial success and well being of the Borrower or of
the Borrower and its Subsidiaries taken as a whole.
6.16 Compliance with Laws and Regulations. The execution and
------------------------------------
delivery by the Borrower and each of its Subsidiaries, as applicable, of this
Agreement and all of the other Financing Agreements and the performance of the
Borrower's obligations hereunder and thereunder are not in contravention of any
law or laws. The Borrower and each of its Subsidiaries has obtained all
licenses, authorizations, approvals and permits necessary in connection with the
operation of its business of which the failure to obtain could be material to
the financial condition, results of operations or business of the Borrower or of
the Borrower and its Subsidiaries taken as a whole. The Borrower and each of its
Subsidiaries is in compliance with all laws, orders, regulations and ordinances
of all federal, foreign, state and local governmental authorities relating to
its business operations and the assets, with which the failure to comply could
be material to the financial condition, results of operations or business of the
Borrower or of the Borrower and its Subsidiaries taken as a whole.
6.17 Patents, Trademarks, Licenses. The Borrower and each of its
-----------------------------
Subsidiaries possesses adequate licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications, tradestyles,
tradenames and similar assets to continue to conduct its business as heretofore
conducted by it, all of which are described on Schedule 6.17 attached hereto.
-------------
6.18 Environmental Matters. Except as disclosed on Schedule 6.18
--------------------- -------------
attached hereto, (a) the Borrower and each of its Subsidiaries has complied in
all material respects with Environmental Laws regarding transfer, construction
on and operation of its business and property, including but not limited to
notifying authorities, observing restrictions on use, transferring, modifying or
obtaining permits, licenses, approvals and registrations, making required
notices, certifications and submissions, complying with financial liability
requirements, Managing Hazardous Substances and Responding to the presence or
Release of Hazardous Substances connected with operation of the business or
property; (b) the noncompliance by the Borrower or any of its Subsidiaries with
Environmental Laws would not have a
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 25
material adverse effect on the business, operations, prospects, assets, property
or condition (financial or otherwise) of the Borrower or of the Borrower and its
Subsidiaries taken as a whole; (c) neither the Borrower, nor the Borrower and
its Subsidiaries taken as a whole, has any material contingent liability with
respect to the Management of any Hazardous Substance; (d) during the term of
this Agreement, neither the Borrower nor any of its Subsidiaries shall permit
others to Manage, whether on or off their respective property, Hazardous
Substances connected with the operation of its business or property, except in
material compliance with Environmental Laws; (e) the Borrower and each of its
Subsidiaries shall take prompt action in compliance with Environmental Laws to
Respond to the on-site or off-site Release of Hazardous Substances connected
with the operation of its business or property; and (f) neither the Borrower nor
any of its Subsidiaries has received any Environmental Notice.
6.19 Fees to Third Parties. Neither the Borrower nor any of its
---------------------
Subsidiaries is in any way obligated to any Person in respect of any finder's or
broker's fee or similar commission in connection with the closing of the
transactions evidenced by the Financing Agreements. The Borrower agrees to
indemnify the Agent and each Lender and hold the Agent and each Lender harmless
from any claims for any such fees or commissions from any Persons.
6.20 Securities Matters. The making of the Revolving Loans and the
------------------
issuance of the Letters of Credit hereunder, the application of the proceeds and
repayment thereof by the Borrower, and the consummation of the transactions
contemplated by the Financing Agreements, have not and will not violate any
provision of any federal or state securities statutes, rules or regulations, or
any order issued by the Securities and Exchange Commission (collectively,
"Securities Laws"). The Borrower agrees to indemnify the Agent and each Lender
---------------
and hold the Agent and each Lender harmless from the claims of any Persons in
connection with any Securities Laws.
6.21 Disclosure. Except as corrected prior to the date hereof in
----------
writing, no information provided or statements made by the Borrower or its
representatives, or by any Subsidiary or its representatives, in writing to the
Agent or any Lender contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6.22 Equity Ownership. Schedule 6.22 attached hereto sets forth the
--------------- -------------
number of shares of each class of common and preferred stock authorized for the
Borrower and each of its Subsidiaries, the number of shares of each such class
of stock outstanding, the owners of such shares and the number of shares of each
such class of stock owned by each such owner. The outstanding capital stock of
the Borrower and each of the Subsidiaries is duly authorized, validly issued,
fully paid and nonassessable.
6.23 Pension Related Matters. Each employee pension or benefit plan
-----------------------
(other than a multiemployer plan within the meaning of Section 3 (37) of ERISA
and to which the Borrower or any ERISA Affiliate has or had any obligation to
contribute (a "Multiemployer Plan")) to which Section 4021(a) of ERISA applies
------------------
and (a) which is maintained for employees of the Borrower or any of its ERISA
Affiliates or (b) to which the Borrower or any of its ERISA Affiliates made, or
was required to make, contributions at any time within the preceding five (5)
years (a "Plan"), maintained by the Borrower or any ERISA Affiliate and each
----
Multiemployer Plan complies, and has been administered in accordance, with its
term and all material applicable requirements of ERISA and of the Internal
Revenue Code of 1986, as amended (the "Tax Code") and with all material
--------
applicable rulings and regulations issued under the provisions of ERISA and the
Tax Code setting forth those requirements. No "Reportable Event," "Prohibited
Transaction" (as each is defined below) or withdrawal from a Multiemployer Plan
has occurred and no funding deficiency described in Section 302 of ERISA exists
with respect to any Plan or Multiemployer Plan which could have a material
adverse effect on the financial condition, results of operation or business of
the Borrower or any ERISA Affiliate. The Borrower and each ERISA Affiliate has
satisfied all of the funding standards applicable to such Plans and
Multiemployer Plans under Section 302 of ERISA and Section 412 of the Tax Code
and the Pension Benefit Guaranty Corporation ("PBGC") has not instituted any
----
proceedings, and there exists no event or condition which would constitute
grounds for the institution of proceedings by PBGC, to terminate any Plan or
Multiemployer Plan under Section 4042 or ERISA which could have a material
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 26
adverse effect on the financial condition, results of operation or business of
the Borrower or any ERISA Affiliate. Neither the Borrower nor any ERISA
Affiliate has taken any steps to terminate any Plan, which termination could
have a material adverse effect on the financial condition, results of operation
or business of the Borrower or any ERISA Affiliate. Neither the Borrower nor any
ERISA Affiliate has taken any steps to terminate its participation in any
Multiemployer Plan or withdraw from any Multiemployer Plan, which termination or
withdrawal could have a material adverse effect on the financial condition,
results of operations or business of the Borrower or any ERISA Affiliate. The
Borrower and each ERISA Affiliate has made all contributions to each Plan and
each Multiemployer Plan to which it has become obligated to contribute as to
which the failure to make contributions could have a material adverse effect on
the financial condition, results of operation or business of the Borrower or any
ERISA Affiliate. The Borrower is not aware of any assessments or assertions of
withdrawal liability against it or any ERISA Affiliate with respect to any Plan
or Multiemployer Plan. The aggregate potential withdrawal liability under all
Multiemployer Plans to which the Borrower and each ERISA Affiliate is obligated
to contribute is less than an amount which, if all such liabilities were
incurred, could have a material adverse effect on the financial condition,
results of operation or business of the Borrower or any ERISA Affiliate. For
purposes hereof, (i) a "Prohibited Transaction" shall mean, with respect to any
----------------------
Plan, any transaction described in Section 406 of ERISA which is not exempt by
reason of Section 408 of ERISA or the transitional rules set forth in Section
414(c) of ERISA and any transaction described in Section 4975(c) (1) of the Tax
Code which is not exempt by reason of Section 4975 (c) (2) or Section 4975 (d)
of the Tax Code, or the transitional rules of Section 2003(c) of ERISA and (ii)
a "Reportable Event" shall mean (x) a reportable event described in Section 4043
----------------
of ERISA and regulations thereunder, (y) a withdrawal by a substantial employer
from a single-employer plan which is a Plan and which has two or more
contributing sponsors at least two of which are not under common control, as
referred to in Section 4063(b) of ERISA, or (z) a cessation of operations at a
facility causing more than twenty percent (20%) of plan participants to be
separated from employment, as referred to in Section 4068(f) of ERISA.
7. AFFIRMATIVE COVENANTS.
---------------------
The Borrower covenants and agrees that, as long as any Liabilities remain
outstanding, and (even if there shall be no Liabilities outstanding) as long as
this Agreement remains in effect:
7.1 Financial Statements.
--------------------
(1) Except as otherwise expressly provided for herein, the Borrower
shall and shall cause each of its Subsidiaries to keep proper books of record
and account in which full and true entries will be made of all dealings or
transactions of or in relation to the business and affairs of such corporation,
in accordance with GAAP, and the Borrower shall cause to be furnished to the
Agent and each Lender: (a) as soon as practicable and in any event within thirty
(30) days after the end of each month (i) statements of income, retained
earnings and cash flow of the Borrower and its Subsidiaries for such month and
for the period from the beginning of the then current calendar year to the end
of such month and a balance sheet of the Borrower and its Subsidiaries as of the
end of such month, accompanied by, in comparative form, figures for the
corresponding periods in the immediately preceding calendar year, all in
reasonable detail and certified as accurate by the president or the treasurer of
the Borrower, subject to changes resulting from normal year-end adjustments
(such certification to be in the form of Exhibit E attached hereto), (ii) copies
---------
of all operating statements for such month prepared by the Borrower and its
Subsidiaries for their internal use, including without limitation statements of
cash flow, purchases and sales of Inventory and other similar data as the Lender
may reasonably request, and (iii) a comparison of actual cash flow and capital
expenditures with amounts budgeted for such month; (b) as soon as practicable
and in any event within forty-five (45) days after the end of each calendar
quarter, (i) statements of income, retained earnings and cash flow of the
Borrower and its Subsidiaries for such calendar quarter and for the period from
the beginning of the then current calendar year to the end of such quarter and a
balance sheet of the Borrower and its Subsidiaries as of the end of such
quarter, accompanied by, in comparative form, figures for the corresponding
periods in the immediately preceding calendar year, all in reasonable detail and
certified as accurate by the president or the treasurer of the Borrower, subject
to changes resulting from normal year-end adjustments (such certification to be
in the form of Exhibit E attached hereto, adjusted as necessary for presentation
---------
of quarterly statements); (c) as soon as practicable and in any event within one
hundred twenty (120) days after the end of each calendar year, (i) statements of
income, retained earnings and cash flow of the Borrower and its Subsidiaries for
such year, and a balance sheet of the Borrower and its Subsidiaries as of the
end of such year, setting forth in each case, in comparative form, corresponding
figures for the period covered by the preceding annual audit and as of the end
of the preceding calendar year, all in reasonable detail and satisfactory in
scope to the Agent and examined by independent certified public accountants
selected by the Borrower and reasonably satisfactory to the Agent, whose opinion
shall be unqualified and otherwise in scope and substance satisfactory to the
Lender and (ii) a signed financial statement of Xxxxxxx X. Xxxxxxxxx as of the
end of such calendar year, prepared in form satisfactory to Agent; (d) as soon
as practicable and in any event within thirty (30) days before the end of each
calendar year of the Borrower, Projections, and within thirty (30) days after
the close of
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 27
each calendar month, a statement in which the actual results of such month are
compared with the corresponding forecasts contained in the most recent
Projections; (e) as soon as practicable and in any event within ten (10) days of
delivery to the Borrower, a copy of any letter issued by the Borrower's
independent certified public accountants or other management consultants with
respect to the Borrower's financial or accounting systems or controls; (f) as
soon as practicable (but in any event not more than five (5) days after the
president or the treasurer of the Borrower obtains knowledge of the occurrence
of an event or the existence of a circumstance giving rise to a Default or an
Event of Default), notice of any and all Defaults and Events of Default
hereunder; and (g) and with reasonable promptness, such other business or
financial data as the Agent or any Lender may reasonably request. Whether or not
required by the rules or regulations of the Securities and Exchange Commission
(the "SEC"), the Borrower will deliver to the Agent and the Lenders (i) all
---
quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Form 10-Q and Form 10-K, respectively, as
if the Borrower were required to file such forms, including a "Management's
Discussion and Analysis of Financial Condition and Risks of Operations" and,
with respect to annual information only, a report thereon by the Borrower's
independent certified accountants and (ii) all current reports that would be
required to be filed with the SEC on Form 8-K as if the Borrower were required
to file such report, in each case within the time periods specified in the SEC's
rules and regulations. In addition, and without limitation by the foregoing, the
Borrower shall also promptly deliver to the Agent and the Lenders any and all
other filings, reports and information at any time, from time to time, filed
with or furnished by the Borrower or any of its Subsidiaries to the SEC.
(2) All financial statements delivered to the Agent and the Lenders
pursuant to the requirements of this Section 7.1 (except where otherwise
-----------
expressly indicated) shall be prepared in accordance with GAAP; all such
financial statements delivered pursuant to clause (a) thereof shall be
----------
separately prepared and presented for the Borrower and each of its Subsidiaries,
respectively, and all financial statements delivered pursuant to clause (b) and
----------
clause (c) thereof shall be prepared on a consolidated and consolidating basis
---------
for the Borrower and its Subsidiaries. Together with each delivery of financial
statements required by this Section 7.1, the Borrower shall deliver to the Agent
-----------
and each Lender an officer's certificate (i) stating that there exists no
Default or Event of Default (such certification to be in the form of Exhibit E
---------
attached hereto), or, if any Default or Event of Default exists, specifying the
nature thereof, the period of existence thereof and what action the Borrower
proposes to take with respect thereto and (ii) including a specific line item
disclosing the aggregate financial obligations of the Borrower and its
Subsidiaries for rental payments, principal payments, interest payments, service
charges, or otherwise, under all leases, lease acquisition agreements,
capitalized lease arrangements, conditional sales contracts, purchase money
security arrangements and other similar arrangements. Together with each
delivery of financial statements required by subsection 7.l(c) above, the
-----------------
Borrower shall deliver to the Agent and each Lender a certificate of the
accountants who performed the audit in connection with such statements stating
that in making the audit necessary to the issuance of a report on such financial
statements, they have obtained no knowledge of any Default or Event of Default,
or, if such accountants have obtained knowledge of a Default or Event of
Default, specifying the nature and period of existence thereof. Such accountants
shall not be liable by reason of any failure to obtain knowledge of any Default
or Event of Default which would not be disclosed in the ordinary course of an
audit. The Agent and each Lender shall exercise reasonable efforts to keep such
information, and all information acquired as a result of any inspection
conducted in accordance with Section 7.2, confidential, provided, that the Agent
----------- --------
and each Lender may communicate such information to (w) any other Person in
accordance with the customary practices of commercial banks relating to routine
trade inquiries, (x) any regulatory authority having jurisdiction over such
Lender, (y) any other Person in connection with such Lender's sale of any
participations in the Liabilities, or (z) any other Person in connection with
the exercise of the Agent's or any Lender's rights hereunder or under any of the
other Financing Agreements. The Borrower authorizes the Agent and each Lender to
discuss the financial condition of the Borrower with the Borrower's independent
certified public accountants (and the Borrower hereby authorizes such
independent certified public accountants to discuss same with such Persons) and
agrees that such discussion or communication shall be without liability to any
of the Agent, any Lender or the Borrower's independent certified public
accountants.
7.2 Inspection. The Agent or any Lender, or any Person designated by
----------
the Agent or any Lender in writing, shall have the right, from time to time
hereafter, to call at the Borrower's or any Subsidiary's place or places of
business (or any other place where the Collateral or any information relating
thereto is kept or located) upon reasonable notice during ordinary business
hours, and, without hindrance or delay, (a) to inspect, audit, check and make
copies of and extracts from such corporation's books, records, journals, orders,
receipts and any correspondence and other data relating to its business or to
any transactions between the parties hereto, (b) to make such verification
concerning the Collateral as the Agent or any Lender may consider reasonable
under the circumstances and (c) to discuss the affairs,
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 28
finances and business of such corporation with any officers, employees or
directors of such corporation. The Borrower shall pay on demand all reasonable
photocopying expenses incurred by the Agent or any Lender under this Section
-------
7.2.
---
7.3 Conduct of Business. The Borrower shall and shall cause each of
-------------------
its Subsidiaries to maintain its corporate existence, shall maintain in full
force and effect all licenses, permits, authorizations, bonds, franchises,
leases, patents, trademarks, contracts and other rights necessary or desirable
to the profitable conduct of its business, shall continue in, and limit its
operations to, the same general line of business as that presently conducted and
shall comply with all applicable laws, orders, regulations and ordinances of all
federal, foreign, state and local governmental authorities except for such laws,
orders, regulations and ordinances the violation of which would not, in the
aggregate, have a material adverse effect on such corporation's financial
condition, results of operations or business.
7.4 Claims and Taxes. Absent the Agent's and each Lender's gross
----------------
negligence or willful misconduct, the Borrower agrees to indemnify and hold the
Agent and each Lender and their respective affiliates, officers, directors,
employees, attorneys and agents harmless from and against any and all claims,
demands, liabilities, losses, damages, penalties, costs and expenses (including
attorneys' and paralegals' fees) relating to or in any way arising out of the
possession, use, operation or control of any of the Borrower's or any
Subsidiary's assets. The Borrower shall pay or cause to be paid all license
fees, bonding premiums and related taxes and charges and shall pay or cause to
be paid all of the Borrower's and each Subsidiary's real and personal property
taxes, assessments and charges and all of the Borrower's and each Subsidiary's,
if any, franchise, income, unemployment, use, excise, old age benefit,
withholding, sales and other taxes and other governmental charges assessed
against the Borrower or any Subsidiary or payable by the Borrower or any
Subsidiary at such times and in such manner as to prevent any penalty from
accruing or any lien or charge from attaching to its property; provided, that
--------
the Borrower or such Subsidiary, as applicable, shall have the right to contest
in good faith, by an appropriate proceeding promptly initiated and diligently
conducted, the validity, amount or imposition of any such tax, assessment or
charge, and upon such good faith contest to delay or refuse payment thereof, if
(a) such corporation establishes adequate reserves to cover such contested
taxes, assessments or charges and (b) such contest does not have a material
adverse effect on the financial condition of such corporation, the ability of
such corporation to pay any of the Liabilities, or the priority or value of the
Agent's security interest in the Collateral.
7.5 Costs and Expenses as Additional Liabilities. The Borrower shall
--------------------------------------------
reimburse the Agent for all expenses and reasonable fees paid or incurred in
connection with (a) the documentation, negotiation and closing of this Agreement
and other transactions described herein and in the other Financing Agreements,
(b) any amendment, waiver or consent executed in connection with this Agreement
or any of the other Financing Agreements and (c) the enforcement or preservation
of the Agent's and each Lender's rights under this Agreement and any of the
other Financing Agreements, including without limitation stamp, document,
transfer, filing and recording fees and the expenses and reasonable fees of the
Agent's auditors, attorneys and paralegals, whether such expenses and fees are
incurred by the Agent prior to or after the date hereof. All such costs and
expenses incurred by the Agent with respect to the documentation, negotiation,
enforcement, collection and protection of the Agent's interests in the
Collateral, including without limitation the cost of such appraisals and
environmental update inspections as may hereafter be required by the Agent,
shall be additional Liabilities of the Borrower to the Agent, payable on demand,
and secured by the Collateral and shall, if not paid by the Borrower when due or
demanded, bear interest at the rate applicable to Floating Rate Loans.
7.6 The Borrower's Liability Insurance. The Borrower shall and shall
----------------------------------
cause each of its Subsidiaries to maintain, at its expense, such public
liability and third party property damage insurance in such amounts and with
such deductibles as is ordinarily maintained by other Persons engaged in similar
businesses and shall deliver to the Agent the original (or a certified) copy of
each policy of insurance and evidence of the payment of all premiums therefor.
Such policies of insurance shall contain an endorsement showing the Agent and
each Lender as additional insured thereunder and providing that the insurance
company will give the Agent at least thirty (30) days prior written notice
before any such policy or policies of insurance shall be altered or canceled.
7.7 The Borrower's Property Insurance. The Borrower shall and shall
---------------------------------
cause each of its Subsidiaries to, at its expense, keep and maintain its assets
insured against loss or damage by fire, theft, explosion, spoilage and all other
hazards and risks ordinarily insured against by other owners or users of such
properties in similar businesses in an amount at least equal to the full
insurable value of all such property. All such policies of insurance shall be in
form and substance satisfactory to the Agent. The Borrower shall deliver to the
Agent the original (or a certified)
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 29
copy of each policy of insurance and evidence of payment of all premiums
therefor. Such policies of insurance shall contain an endorsement, in form and
substance satisfactory to the Agent, showing all loss payable to the Agent, as
its interests may appear, as provided below in this Section 7.7. Such
-----------
endorsement, or an independent instrument furnished to the Agent, shall provide
that such insurance company will give the Agent at least thirty (30) days prior
written notice before any such policy or policies of insurance shall be altered
or canceled and that no act or default of the Borrower, any Subsidiary or any
other Person shall affect the right of the Agent to recover under such policy or
policies of insurance in case of loss or damage. The Borrower hereby directs all
insurers under such policies of insurance to pay all proceeds of insurance
policies directly to the Agent as its interests may exist and the Agent shall,
in its sole discretion, either apply such proceeds against the Liabilities (in
such order as the Agent, in its sole discretion, may determine) or permit the
Borrower to use such proceeds to restore or rebuild the damaged property. The
Borrower irrevocably makes, constitutes and appoints the Agent (and all
officers, employees or agents designated by the Agent), during the continuance
of a Default, as the Borrower's true and lawful attorney-in-fact for the purpose
of making, settling and adjusting claims under all such policies of insurance,
endorsing the name of the Borrower or any Subsidiary on any check, draft,
instrument or other item of payment received by the Borrower or the Agent
pursuant to any such policies of insurance and for making all determinations and
decisions with respect to such policies of insurance. If the Borrower or any
Subsidiary at any time or times hereafter, shall fail to obtain or maintain any
of the policies of insurance required above or to pay any premium in whole or in
part relating thereto, then the Agent, without waiving or releasing any
obligation or default by the Borrower hereunder, may at any time or times
thereafter (but shall be under no obligation to do so) obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto which the Agent deems advisable, and the amount so expended
shall be part of the Liabilities, payable on demand and secured by the
Collateral and shall, if not paid by the Borrower when due or demanded, bear
interest at the rate applicable to Floating Rate Loans.
7.8 Pension Plans. The Borrower shall and shall cause each ERISA
-------------
Affiliate to (a) make contributions to all of the Plans and Multiemployer Plans
in a timely manner and in a sufficient amount to comply with the requirements of
ERISA; (b) comply with all material requirements of ERISA and the Tax Code which
relate to Plans and Multiemployer Plans, the failure to comply with which could
have a material adverse effect on the financial condition, results of operation
or business of the Borrower or any ERISA Affiliate; (c) notify the Agent
immediately upon receipt by the Borrower of any notice of the institution of any
proceeding or other action which may result in the termination of any Plans or
Multiemployer Plans; and (d) immediately notify the Agent of the occurrence of a
"Termination Event" (as defined below). For purposes hereof, a "Termination
-----------
Event" shall mean (i) the occurrence of a Reportable Event or a Prohibited
-----
Transaction, (ii) the complete or partial withdrawal (as defined in Sections
4203 and 4205 of ERISA) by the Borrower or any ERISA Affiliate from a
Multiemployer Plan, or the receipt by the Borrower or any ERISA Affiliate of a
demand from any Multiemployer Plan for withdrawal liability, (iii) the filing of
a notice of intent to terminate any Plan or the treatment of a plan amendment as
a termination of any such Plan under Section 4041 of ERISA, (iv) any action
causing termination under Section 4041A of ERISA of any Multiemployer Plan, (v)
the institution of proceedings to terminate any Plan or Multiemployer Plan by
the PBGC under Section 4042 of ERISA, or (vi) the occurrence of any other event
or condition which might constitute grounds under Sections 4041A or 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan.
7.9 Notice of Suit or Adverse Change in Business. The Borrower
--------------------------------------------
shall, as soon as possible, and in any event within five (5) days after an
officer of the Borrower located in Beloit, Wisconsin learns of the following,
give written notice to the Agent of (a) any proceedings, potentially material to
the business or financial condition of the Borrower or any of its Subsidiaries,
including without limitation all proceedings where the amount in controversy
exceeds Two Hundred Fifty Thousand Dollars ($250,000), being instituted or
threatened to be instituted by or against the Borrower or any of its
Subsidiaries in any federal, state, local or foreign court or before any
commission or other regulatory body (federal, state, local or foreign) and (b)
any material adverse change in the business, assets or condition, financial or
otherwise, of the Borrower or of the Borrower and its Subsidiaries taken as a
whole.
7.10 Supervening Illegality. If, at any time or times hereafter,
----------------------
there shall become effective any amendment to, deletion from or revision,
modification or other change in any provision of any statute, or any rule,
regulation or interpretation thereunder or any similar law or regulation,
adversely affecting any Lender's extension of credit described in this Agreement
and/or the selling of participations therein, the Borrower shall, at any
Lender's option, either (a) pay to such Lender the then outstanding balance of
such Lender's Pro Rata Share of the Liabilities, indemnify and hold such Lender
harmless from and against any and all obligations, fees, liabilities, losses,
penalties, costs, expenses
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 30
and damages, of every kind and nature, imposed upon or incurred by the Borrower
by reason of such Lender's failure or inability to comply with the terms of this
Agreement or any of the other Financing Agreements or (b) indemnify and hold
such Lender harmless from and against any and all obligations, fees,
liabilities, losses, penalties, costs, expenses and damages, of every kind and
nature, imposed upon or incurred by such Lender by reason of such amendment,
deletion, revision, modification, or other change. In the event that any such
amendment to, deletion from or revision, modification or other change does not
materially adversely affect a Lender's extension of credit described in this
Agreement or the selling of participations therein, such Lender shall not elect
the provisions of clause (a) above.
----------
7.11 Environmental Matters. The Borrower shall promptly notify and
---------------------
furnish the Agent with a copy of any and all Environmental Notices which are
received by it or any of its Subsidiaries, if any. The Borrower shall and shall
cause its Subsidiaries to take prompt and appropriate action in response to any
and all such Environmental Notices and shall promptly furnish the Agent with a
description of such corporation's response thereto.
7.12 Use of Proceeds. The Borrower shall use the proceeds of the
---------------
disbursements of the Revolving Loans and the Letters of Credit for working
capital and other proper corporate purposes.
7.13 Notice of Business Interruption. The Borrower shall give the
-------------------------------
Agent prompt notice if the Borrower or any of its Subsidiaries is enjoined,
restrained, or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
the business affairs of the Borrower or of the Borrower and its Subsidiaries
taken as a whole.
7.14 Interest Rate Protection. Within sixty (60) days of any request
------------------------
by the Agent, the Borrower shall execute and enter into an interest rate
protection agreement or other agreement for protection against the risk of
interest rate fluctuations, with a Person, and in form and substance,
satisfactory to the Agent (Borrower acknowledges in this regard that Borrower is
not required to enter into any such agreement with the Agent or any Lender, or
any Affiliate of the Agent or any Lender, as a condition for any of the benefits
to Borrower under this Agreement).
8. NEGATIVE COVENANTS.
------------------
The Borrower covenants and agrees that as long as any Liabilities remain
outstanding, and (even if there shall be no Liabilities outstanding) as long as
this Agreement remains in effect (unless the Agent shall give its prior written
consent thereto which consent, in the absence of Default or an Event of Default
shall not be unreasonably withheld in the case of acquisitions described in
Section 8.3):
-----------
8.1 Encumbrances. Except as set forth on Schedule 6.5 hereto,
--------------------- ------------
neither the Borrower nor any of its Subsidiaries will create, incur, assume or
suffer to exist any security interest, mortgage, pledge, lien or other
encumbrance of any nature whatsoever on any of its assets, other than: (a) liens
securing the payment of taxes, either not yet due or the validity of which is
being contested in good faith by appropriate proceedings, and as to which the
Borrower or such Subsidiary, as applicable, shall, if appropriate under GAAP,
have set aside on its books and records adequate reserves; provided, however,
-------- -------
that such contest does not have a material adverse effect on the ability of such
corporation to pay any of the Liabilities, or the priority or value of the
Agent's security interest in the Collateral; (b) deposits under worker's
compensation, unemployment insurance, social security and other similar laws, or
to secure the performance of bids, tenders or contracts (other than for the
repayment of borrowed money) or to secure indemnity, performance or other
similar bonds for the performance of bids, tenders or contracts (other than for
the repayment of borrowed money) or to secure statutory obligations or surety or
appeal bonds, or to secure indemnity, performance or other similar bonds in the
ordinary course of business; (c) security interests in real estate securing
indebtedness permitted by this Agreement; (d) liens and security interests in
favor of the Agent; (e) purchase money security interests in Equipment arising
in connection with capital expenditures permitted by Section 8.8, provided, that
----------- --------
the Agent has consented to such security interest as provided by the proviso of
clause (vi) of Section 10.15 and (f) subject to Section 10.15, such security
----------- ------------- -------------
interests and liens as Agent may agree in writing to allow.
8.2 Indebtedness. Except as set forth on Schedule 6.10 attached
------------ -------------
hereto or as permitted under Section 8.8 or 8.12 hereof, neither the Borrower
----------- ----
nor any of its Subsidiaries shall incur, create, assume, become or be liable in
any manner with respect to, or permit to exist, any obligations or indebtedness,
except (a) the Liabilities, (b)
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 31
trade payables and normal accruals in the ordinary course of business or assumed
by the Borrower in the purchase of an Additional Location to the extent
permitted in Section 8.3 not yet due and payable, or with respect to which such
-----------
corporation is contesting in good faith the amount or validity thereof by
appropriate proceedings, and then only to the extent that such corporation has
set aside on its books adequate reserves therefor, in accordance with GAAP, (c)
other liabilities, assumed by the Borrower in the purchase of an Additional
Location to the extent permitted in Section 8.3, (d) indebtedness secured by
-----------
real estate or Equipment, provided, that, in the case of indebtedness secured by
--------
Equipment, the Agent has consented to the lien securing such indebtedness as
provided by the proviso of clause (vi) of Section 10.15, (e) purchase money
----------- -------------
obligations incurred in connection with the purchase of an Additional Location,
to the extent permitted under Section 8.3, (f) purchase money indebtedness
-----------
incurred in connection with capital expenditures permitted under Section 8.8,
-----------
(g) indebtedness, accrued interest and other charges, if any, evidenced by the
Senior Subordinated Notes and (h) indebtedness secured by security interests
allowed under clause (e) of Section 8.1.
---------- -----------
8.3 Consolidations, Mergers or Acquisitions.
---------------------------------------
a. Neither the Borrower nor any of its Subsidiaries shall
recapitalize or consolidate with, merge with, or otherwise acquire any
shares or other equity interest in, or any of the assets or properties of,
any other Person, except for inventory, Rolling Stock, Equipment and real
estate (provided, that in connection with all real estate purchases made
--------
pursuant to this Section 8.3, the Borrower shall exercise reasonable due
-----------
diligence with respect to environmental risks involved in such purchases,
which due diligence shall include but not be limited to the review of a
timely phase I environmental audit) purchased in the ordinary course of
business, and except for assets (including accounts receivable and
intangibles but excluding shares or equity interests) purchased in
connection with the acquisition of any additional retail, distribution,
manufacturing or installation facility relating to one or more exterior
building products (any such facility is referred to herein as an
"Additional Location"); except, that assets of any Additional Location may
------------------- ------
be purchased only if:
(i) within a reasonable time prior to such proposed purchase
the Borrower first provides the Agent and each Lender with notice of
such proposed purchase and promptly (and in any event within fifteen
(15) calendar days after Borrower's execution and delivery thereof)
provides the Agent and each Lender with a copy of the purchase
agreement (including all exhibits and schedules) relating thereto,
and in addition, provides the Agent and each Lender, promptly upon
the request therefor (and in any event prior to consummation of any
such proposed purchase), with such other information, documents,
certificates or opinions relating to such proposed purchase as the
Agent or such Lender may request;
(ii) the Fixed Charge Coverage Ratio, determined as of the
last day of the calendar month ending prior to such effective date,
equal to or greater than 1.0 to 1.0;
(iii) if the Fixed Charge Coverage Ratio, determined as of the
last day of the calendar month ending prior to the effective date of
such purchase is less than or equal to 1.2 to 1.0, (A) the Purchase
Price for such Additional Location does not exceed Five Million
Dollars ($5,000,000), and (B) the Purchase Price for such Additional
Location plus the aggregate Purchase Price for all Additional
Locations, if any, purchased during the preceding 365 days with
respect to which the Fixed Charge Coverage ratio, determined as of
the last day of the calendar month ending prior to the effective
date of any such purchase, was less than or equal to 1.2 to 1.0,
does not exceed Twenty Million Dollars ($20,000,000.00);
(iv) the aggregate unpaid balance of purchase money
obligations at any time existing in connection with all such
purchases of Additional Locations shall not exceed Fifteen Million
Dollars ($15,000,000.00);
(v) Average Unused Availability for the period of sixty (60)
days preceding (but not including) the effective date of such
purchase is not less than $25,000,000 and Unused Availability as of
the effective date of such purchase after giving effect to such
purchase on such date, is not less than $25,000,000;
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 32
(vi) As of the effective date of such purchase, not more
than one Post Test Event Shortfall has occurred; and
(vii) no Default or Event of Default has occurred and
continues to exist on the effective date and after giving effect to
such purchase;
provided, however, that no Accounts or Inventory acquired by the Borrower
--------
pursuant to any such purchase shall be included in any Collateral Report
prior to the earlier of (i) the satisfactory completion by the Agent of a
field examination and other due diligence review thereof, (ii) thirty (30)
days after the effective date of such purchase or such longer period as
may be required in order to complete such field examination and review if
the Agent has notified the Borrower in writing that such examination and
review has not been completed despite the Agent's reasonable commercial
efforts or (iii) confirmation by the Agent in writing of its consent for
such inclusion; provided, however, that nothing herein shall impair the
-------
requirements otherwise applicable for determination of Eligible Accounts
and Eligible Inventory. As used in this Section 8.3, "Purchase Price"
----------- --------------
means the aggregate amount of the purchase price payable by the Borrower
to the seller in respect of the purchase of an Additional Location,
including, without limitation, cash payments, assumptions of liability and
purchase money obligations, but excluding the portion, if any, of any such
---------
purchase money obligations which by their terms are amortized and payable
in excess of eighteen (18) months after the date of incurrence).
b. No Person shall acquire all or substantially all of the stock or
assets of the Borrower. Neither the Borrower nor any of its Subsidiaries
shall create any additional subsidiaries, unless promptly upon creation or
acquisition of any such subsidiary (the "New Subsidiary"), the Borrower or
--------------
any of its Subsidiaries shall cause the New Subsidiary to execute and
deliver to the Agent (i) a continuing unlimited guaranty agreement in
favor of the Agent, for the benefit of the Lenders, pursuant to which the
New Subsidiary shall guarantee the prompt payment and performance of the
Liabilities and all other obligations of the Borrower under the Financing
Agreements and (ii) a security agreement pursuant to which the New
Subsidiary shall grant to the Agent, for the benefit of the Lenders, a
continuing first priority security interest and lien in and to all
property of the type or nature specified in Section 5.1, at any time owned
-----------
or acquired by such New Subsidiary, as continuing security for the
Liabilities and for the New Subsidiary's obligations under such guaranty
agreement, (iii) such documentation in respect of existence and
authorizing resolutions as the Agent may request, and (iv) such other
instruments, agreements, opinions or other documents as the Agent may
reasonably request, in of the foregoing cases in form and substance
satisfactory to the Agent and the Lenders.
8.4 Investments or Loans. Neither the Borrower nor any of its
--------------------
Subsidiaries shall make or permit to exist investments or loans in or to any
other Person, except (a) investments in short-term direct obligations of the
United States Government, (b) investments in negotiable certificates of deposit
issued by any Lender or by any other bank satisfactory to the Agent, payable to
the order of the Borrower or to bearer, (c) investments in commercial paper
rated A1 or P1, (d) loans to and investments in Affiliates which in the
aggregate shall not exceed the Affiliates Investments Limit, reduced by the
aggregate amount, if any, paid by the Borrower on or with respect to any
guaranty referred to in clause (b) of Section 8.5 (but only to the extent that
---------- -----------
such guaranty payments by the Borrower have not been reimbursed, and provided,
--------
that any such loans and investments will be made solely to permit the
acquisition of assets which will inure to the benefit of the Borrower and
provided further, that during the continuance of a Default or an Event of
Default, the Borrower shall not increase the principal balance of, or make any
new loan to or investment in, any Affiliate, but the balance due under the
existing loans may increase as the result of the accrual of interest and similar
charges and the Borrower may renew such loans), (e) loans by the Borrower to
Subsidiaries that are wholly owned by the Borrower, in an aggregate amount
outstanding at any time not exceeding Ten Million Dollars ($10,000,000.00),
provided that such loans are for the purpose of providing working capital to any
such Subsidiary for its use in the ordinary course of business and (f)
investments in the equity securities of any Person, other than a wholly-owned
Subsidiary, having an aggregate fair market value (measured on the date each
such investment was made and without giving effect to subsequent changes in
value), when taken together with all other such investments or loans made
pursuant to this clause (f) that are at the time outstanding, not to exceed One
Million Dollars ($1,000,000.00).
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 33
8.5 Guarantees. Neither the Borrower nor any of its Subsidiaries
----------
shall guarantee, endorse or otherwise in any way become or be responsible for
obligations of any other Person, whether by agreement to purchase the
indebtedness of any other Person or through the purchase of goods, supplies or
services, or maintenance of working capital or other balance sheet covenants or
conditions, or by way of stock purchase, capital contribution, advance or loan
for the purpose of paying or discharging any indebtedness or obligation of such
other Person or otherwise, except (a) endorsements of negotiable instruments for
collection in the ordinary course of business and (b) guarantees of indebtedness
not to exceed Ten Million Dollars ($10,000,000) in the aggregate outstanding at
any one time and, except for those guaranties set forth on Schedule 8.5 attached
------------
hereto, and (c) guarantees of indebtedness evidenced by the Senior Subordinated
Notes, provided that such guarantees are subordinated in right of payment and
--------
claim in favor of the prior payment to the Agent and the Lenders of all
Liabilities, in form and substance satisfactory to the Agent and the Lenders,
and the guaranty agreements evidencing such guarantees are otherwise in form and
substance satisfactory to the Agent and the Lenders and (d) guarantees in favor
of the Agent, for the benefit of the Lenders, of the Liabilities. All guaranties
outstanding as of the date of this Agreement are set forth on Schedule 8.5
------------
attached hereto.
8.6 Inventory Covenants. Neither the Borrower nor any of its
-------------------
Subsidiaries shall sell any Inventory on a xxxx-and-hold or consignment basis.
8.7 Disposal of Property. Neither the Borrower nor any of its
--------------------
Subsidiaries shall sell, lease, transfer or otherwise dispose of any of its
properties, assets and rights to any Person except (a) sales of Inventory in the
ordinary course of business, (b) sales of Equipment or Rolling Stock being
replaced in the ordinary course of business with other Equipment or Rolling
Stock with a fair market value equal to or greater than the Equipment or Rolling
Stock being replaced and (c) sales in any calendar year of other Equipment or
Rolling Stock with an aggregate appraised market value not in excess of an
amount equal to five percent (5.0%) of the Borrower's net asset value (as
determined according to GAAP) as of the last day of the preceding calendar year.
In the event any of the Equipment or other assets of the Borrower or any of its
Subsidiaries is sold, transferred or otherwise disposed of as herein provided,
and such sale, transfer or disposition is effected without replacement of the
property so sold, transferred or disposed of or such property is replaced by
property leased by the Borrower or any of its Subsidiaries the Borrower shall
and shall cause its Subsidiaries to deliver all of the cash proceeds of any such
sale, transfer or disposition to the Agent, for the benefit of the Lenders,
subject to the prior rights, if any, of the Persons listed on Schedule 6.5
------------
attached hereto and Persons contemplated by subsection 8.1(c), which proceeds
-----------------
shall be applied to the repayment of the Liabilities. If any of the Equipment is
sold, transferred or otherwise disposed of as herein provided and such sale,
transfer or disposition is made in connection with the purchase by the Borrower
of replacement Equipment, the Borrower shall use the proceeds of such sale,
transfer or disposition to finance the purchase by the Borrower of replacement
Equipment and shall deliver to the Agent, for the benefit of the Lenders,
written evidence of the use of the proceeds for such purchase. All such
replacement Equipment purchased by the Borrower shall be free and clear of all
liens, claims and encumbrances, except as expressly allowed elsewhere in this
Agreement or as provided on Schedule 6.5 attached hereto.
------------
8.8 Capital Expenditure Limitations. The Borrower and its
-------------------------------
Subsidiaries shall not purchase, invest in or otherwise acquire, additional real
estate, Equipment, Rolling Stock or other fixed assets, which, in the aggregate,
cost the Borrower and its Subsidiaries more than Thirty Five Million Dollars
($35,000,000.00) during the calendar year ending December 31, 2002, and any
calendar year thereafter. For purposes of the foregoing, there shall be excluded
therefrom capital expenditures made in connection with the purchase of an
Additional Location pursuant to Section 8.3.
-----------
8.9 Loans to Officers; Consulting and Management Fees. Except as
-------------------------------------------------
provided in Section 8.4 or disclosed on Schedule 8.9, and for advances for
----------- ------------
travel and expenses to the Borrower's officers, directors or employees in the
ordinary course of business, neither the Borrower nor any of its Subsidiaries
shall make any individual loans in excess of Twenty-Five Thousand Dollars
($25,000) or aggregate loans in excess of Fifty Thousand Dollars ($50,000) to
officers, directors, employees or stockholders of the Borrower or any of its
Subsidiaries and neither the Borrower nor any of its Subsidiaries shall pay any
consulting or similar fees to any officer, director, employee, stockholder,
Affiliate or Subsidiary, if any, of the Borrower or any of its Subsidiaries,
whether for services rendered to such corporation or otherwise.
8.10 Dividends and Stock Redemptions. Neither the Borrower nor any
-------------------------------
of its Subsidiaries shall directly or indirectly, (a) apply any of its funds,
property or assets to, or set apart any funds, property or assets for, the
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 34
purchase, redemption or retirement of, or make any distribution, by reduction of
capital or otherwise in respect of any of its shares of capital stock or other
securities, whether now or hereafter outstanding, or (b) declare or pay, or set
apart any funds for the payment of, any dividends in any calendar year on any
class or classes of stock, except for (i) dividends in an aggregate amount not
to exceed the amount of federal and state income taxes attributable to any
preceding calendar year (and estimated for the current year) from such
stockholders' ownership of stock of the Borrower and (ii) additional dividends
other than those described in clause (b)(i) preceding, provided, that (A) the
------------- --------
Fixed Charge Coverage Ratio, determined as of the last day of the calendar month
ending prior to such effective date, is equal to or greater than 1.20 to 1.0,
(B) Average Unused Availability for the period of sixty (60) days preceding (but
not including) the effective date of payment of such dividend is not less than
$25,000,000, (C) Unused Availability as of the effective date of payment of such
dividend after giving effect to payment of such dividend on such date, is not
less than $25,000,000, (D) as of the effective date of payment of such dividend,
not more than one Post Test Event Shortfall has occurred, (E) the Agent shall
have received the financial statements required by clause (b) of Section 7.1 as
---------- -----------
of the last day of the calendar year for which such dividends are being
calculated, together with the officer's certificate required by Section 7.1 for
-----------
such period demonstrating and certifying that no Default or Event of Default has
occurred and existed as of the last day of such calendar year and and (F) no
Default or Event of Default shall have occurred and be continuing at the time of
payment of any such dividend or shall result therefrom.
8.11 Amendment of Certificate of Incorporation or By-Laws. Absent
----------------------------------------------------
not less than five (5) days' prior written notice to the Agent, neither the
Borrower nor any of its Subsidiaries shall amend its Certificate or Articles of
Incorporation, as applicable, or By-Laws.
8.12 Disclosure of Obligations Under Leases, etc. Borrower will
-------------------------------------------
cause each officer's certificate from time to time delivered to the Agent and
each Lender pursuant to Section 7.1 to include a specific line item disclosing
-----------
the aggregate financial obligations of the Borrower and its Subsidiaries for
rental payments, principal payments, interest payments, service charges, or
otherwise, under all leases, lease acquisition agreements, capitalized lease
arrangements, conditional sales contracts, purchase money security arrangements
and other similar arrangements.
8.13 Fiscal Year End. The Borrower shall not change the end of the
---------------
fiscal year of it and its Subsidiaries from December 31 of each year.
8.14 Transactions with Subsidiaries and Affiliates. Except as
---------------------------------------------
provided in Section 8.4, neither the Borrower nor any of its Subsidiaries will
-----------
transfer any cash or property to any Affiliate or enter into any transaction,
including without limitation the purchase, lease, sale or exchange of property
or the rendering of any service to any Affiliate; provided, that the Borrower
and its Subsidiaries may transfer cash or property to Affiliates and enter into
transactions with Affiliates for fair value in the ordinary course of business
pursuant to terms that are no less favorable to the Borrower and its
Subsidiaries than the terms upon which such transfers or transactions would have
been made had such transfers or transactions been made to or with a Person that
is not an Affiliate.
8.15 Termination Events. The Borrower shall not permit to occur or
------------------
suffer to exist any Termination Event, if such Termination Event could have a
material adverse effect on the financial condition, results of operation or
business of the Borrower or any ERISA Affiliate.
8.16 Bonuses. Except as calculated pursuant to formulae illustrated
-------
on Schedule 8.16 attached hereto, neither the Borrower nor any of its
-------------
Subsidiaries shall pay performance or similar bonuses to its directors, officers
or stockholders.
8.17 Minimum Fixed Charge Coverage Ratio. The Fixed Charge Coverage
-----------------------------------
Ratio, determined as of the last day of each calendar quarter, shall not be less
than 1.00 to 1.0.
8.18 Maximum Funded Debt to EBITDA. The ratio of Funded Debt to
-----------------------------
EBITDA, determined as of the last day of each calendar quarter and measured for
the preceding period of four calendar quarters, shall not exceed 6.00 to 1.0.
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 35
8.19 Minimum Average Unused Availability. The Borrower will not
-----------------------------------
permit Average Unused Availability for any of the following specified calendar
months of each year to be less than the following prescribed amount for such
calendar month:
Specified Calendar Month Minimum Average Unused Availability
------------------------ -----------------------------------
January $ 5,000,000
February $ 5,000,000
March $ 5,000,000
April $ 5,000,000
May $10,000,000
June $15,000,000
July $15,000,000
August $15,000,000
September $15,000,000
October $15,000,000
November $10,000,000
December $ 5,000,000
8.20 Senior Subordinated Notes and Related Guaranties. Neither the
------------------------------------------------
Borrower nor any of its Subsidiaries on its behalf shall (i) make any prepayment
or any other payment on any of the Senior Subordinated Notes other than
scheduled interest payments and payment at stated final maturity thereon
(limited in each case to the extent, if any, not prohibited by the subordination
provisions thereof) or (ii) elect or exercise either of the options provided
under Section 8.01 ("Option to Elect Legal Defeasance or Covenant Defeasance")
------------
of the Indenture with respect to any of the Senior Subordinated Notes, in any
such case without the prior written consent of the Agent, provided, however,
--------
that notwithstanding the foregoing, the Borrower or any of its Subsidiaries on
its behalf may repurchase any of the Senior Subordinated Notes without the prior
written consent of the Agent if (i) the Fixed Charge Coverage Ratio, determined
as of the last day of the calendar month ending prior to such effective date, is
equal to or greater than 1.20 to 1.0, (ii) Average Unused Availability for the
period of sixty (60) days preceding (but not including) the effective date of
such repurchase is not less than $25,000,000, (iii) Unused Availability as of
the effective date of such repurchase after giving effect to such repurchase on
such date, is not less than $25,000,000, (iv) as of the effective date of such
repurchase, not more than one Post Test Event Shortfall has occurred and (v) no
Default or Event of Default has occurred and continues to exist on the effective
date of such repurchase. Prior to making any repurchase pursuant to the proviso
-------
of the preceding sentence, the Borrower will deliver to the Agent, in each case
in form reasonably satisfactory to the Agent, (A) a certificate signed by an
authorized officer of the Borrower (1) stating that the requirements of clauses
-------
(i) through (iv) preceding have been satisfied and (2) setting forth
--- ----
calculations sufficient to demonstrate compliance with the requirements of
clauses (i) and (ii) preceding and (B) a Collateral Report, prepared effective
----------- ----
as of the close of business on the Business Day preceding the effective date of
such repurchase, demonstrating compliance with the requirements of clause (iii)
------------
preceding. The Borrower will not agree to any amendment, change, modification or
restatement of the Senior Subordinated Notes or the Indenture without the prior
written consent of the Agent.
9. DEFAULT, RIGHTS AND REMEDIES OF THE LENDER.
------------------------------------------
9.1 Acceleration. Upon the occurrence of a Default described in
----------------------------
clause (g) of the definition of "Default," all of the Liabilities shall
----------
immediately and automatically, without notice of any kind, be immediately due
and payable; and upon the occurrence of any other Default, any or all of the
Liabilities may, at the option of the Agent, and shall at the direction of the
Requisite Lenders (which direction shall be preceded by not less than thirty
(30) days' prior written notice to the Agent from such Requisite Lenders of
their intent to give such direction) and without presentment, demand, protest or
notice of any kind (all of which are hereby expressly waived), be declared, and
thereupon shall become, immediately due and payable. Upon the occurrence of any
Default the Agent or the Requisite Lenders may, at its or their option,
terminate the obligations of the Lenders to make additional Revolving Loans and
issue additional Letters of Credit. Without limitation of or by the foregoing,
upon the occurrence of a Default, the Agent may, at its option, declare the
portion of the Revolving Loans comprised by Eurodollar Loans to be immediately
due and payable and, without further notice, cause such Eurodollar Loans to be
refinanced by a Revolving Loan in an amount equal to
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 36
the aggregate unpaid principal balance of such Eurodollar Loans, in which event
accrued interest on such unpaid principal amount, plus applicable payments
required by Section 2.11(c), if any, shall be immediately due and payable.
---------------
9.2 Rights and Remedies Generally. Upon the occurrence of a Default,
----------------------------
the Agent, on behalf of the Lenders, shall have, in addition to any other rights
and remedies contained in this Agreement or in any of the other Financing
Agreements, all of the rights and remedies of a secured party under the Code or
other applicable laws, all of which rights and remedies shall be cumulative, and
non-exclusive, to the extent permitted by law. In addition to all such rights
and remedies, the sale, lease or other disposition of the Collateral, or any
part thereof, by the Agent after Default may be for cash, credit or any
combination thereof, and the Agent, on behalf of the Lenders, may purchase all
or any part of the Collateral at public or, if permitted by law, private sale,
and in lieu of actual payment of such purchase price, may set-off the amount of
such purchase price against the Liabilities then owing. Any sales of the
Collateral may be adjourned from time to time with or without notice. The Agent
may, in its sole discretion, cause the Collateral to remain on the Borrower's
premises, at the Borrower's expense, pending sale or other disposition of the
Collateral. The Agent shall have the right to conduct such sales on the
Borrower's premises, at the Borrower's expense, or elsewhere, on such occasion
or occasions as the Agent may see fit.
9.3 Entry Upon Premises and Access to Information. Upon the
---------------------------------------------
occurrence of a Default, the Agent shall have the right to enter upon any
premises of the Borrower where the Collateral is located (or is believed to be
located) without any obligation to pay rent to the Borrower, or any other place
or places where the Collateral is believed to be located and kept, and remove
the Collateral therefrom to the premises of the Agent or any agent of the Agent,
for such time as the Agent may desire, in order effectively to collect or
liquidate the Collateral, and/or the Agent may require the Borrower to assemble
the Collateral and make it available to the Agent at a place or places to be
designated by the Agent. Upon the occurrence of a Default, the Agent shall have
the right to obtain access to the Borrower's data processing equipment, computer
hardware and software relating to the Collateral and to use all of the foregoing
and the information contained therein in any manner the Agent deems appropriate;
and the Agent shall have the right to notify post office authorities to change
the address for delivery of the Borrower's mail to an address designated by the
Agent and to receive, open and process all mail addressed to the Borrower.
9.4 Sale or Other Disposition of Collateral by the Agent. Any notice
----------------------------------------------------
required to be given by the Agent of a sale, lease or other disposition or other
intended action by the Agent with respect to any of the Collateral which is
deposited in the United States mails, postage prepaid and duly addressed to the
Borrower at the address specified in Section 10.13, at least ten (10) Business
-------------
Days prior to such proposed action shall constitute fair and reasonable notice
to the Borrower of any such action. The net proceeds realized by the Agent upon
any such sale or other disposition, after deduction for the expense of retaking,
holding, preparing for sale, selling or the like and the reasonable attorneys'
and paralegals' fees and legal expenses incurred by the Agent in connection
therewith, shall be applied as provided herein toward satisfaction of the
Liabilities including, without limitation the Liabilities described in Sections
--------
7.5 and 10.2. The Agent shall account to the Borrower for any surplus realized
--- ----
upon such sale or other disposition, and the Borrower shall remain liable for
any deficiency. The commencement of any action, legal or equitable, or the
rendering of any judgment or decree for any deficiency shall not affect the
Agent's security interest in the Collateral until the Liabilities are fully
paid. The Borrower agrees that neither the Agent nor any Lender has any
obligation to preserve rights to the Collateral against any other parties. The
Agent is hereby granted a license or other right to use, without charge, the
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, tradestyles, trademarks, service marks and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in completing production of, advertising for sale and selling any Collateral and
the Borrower's rights under all licenses and all franchise agreements shall
inure to the Agent's benefit until the Liabilities are paid.
9.5 Waiver of Demand. Demand, presentment, protest, notice of
----------------
nonpayment, notice of intent to accelerate and notice of acceleration are hereby
waived by the Borrower. The Borrower also waives the benefit of all valuation,
appraisal and exemption laws.
9.6 Waiver of Notice. UPON THE OCCURRENCE OF A DEFAULT, THE BORROWER
----------------
HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE
BY THE LENDER OF ITS RIGHTS TO REPOSSESS THE COLLATERAL WITHOUT JUDICIAL PROCESS
OR TO
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 37
REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL WITHOUT PRIOR NOTICE OR HEARING,
EXCEPT AS OTHERWISE EXPRESSLY REQUIRED HEREIN.
9.7 Advice of Counsel. The Borrower acknowledges that it has been
-----------------
advised by its counsel with respect to this transaction and this Agreement,
including without limitation any waivers contained herein.
10. MISCELLANEOUS.
-------------
10.1 Waiver. The Agent's and the Lenders' failure, at any time or
------
times hereafter, to require strict performance by the Borrower of any provision
of this Agreement shall not waive, affect or diminish any right of the Agent or
any Lender thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by the Agent or any Lender of a Default by the Borrower
under this Agreement or a default under any of the other Financing Agreements
shall not suspend, waive or affect any other Default by the Borrower under this
Agreement or any other default under any of the other Financing Agreements,
whether the same is prior or subsequent thereto and whether of the same or of a
different kind or character. None of the undertakings, agreements, warranties,
covenants and representations of the Borrower contained in this Agreement or any
of the other Financing Agreements and no Default by the Borrower under this
Agreement or default under any of the other Financing Agreements shall be deemed
to have been suspended or waived by the Agent or any Lender unless such
suspension or waiver is in writing signed by an officer of the Agent, and
directed to the Borrower specifying such suspension or waiver.
10.2 Costs and Attorneys' Fees. Without limiting the provisions of
-------------------------
Section 7.5, if at any time or times hereafter the Agent employs counsel in
-----------
connection with protecting or perfecting the Agent's security interest in the
Collateral or in connection with any matters contemplated by or arising out of
this Agreement or any of the other Financing Agreements, whether (a) to
commence, defend, or intervene in any litigation or to file a petition,
complaint, answer, motion or other pleadings, (b) to take any other action in or
with respect to any suit or proceeding (bankruptcy or otherwise), (c) to consult
with officers of the Agent to advise the Agent, (d) to protect, collect, lease,
sell, take possession of, or liquidate any of the Collateral, (e) to attempt to
enforce or to enforce any security interest in any of the Collateral, or (f) to
attempt to enforce or to enforce any rights of the Agent or any Lender
hereunder, including without limitation the right to collect any of the
Liabilities, then in any of such events, all of the reasonable attorneys, fees
arising from such services, and any expenses, costs and charges relating
thereto, including without limitation all reasonable fees of the paralegals and
other staff employed by such attorneys, shall be part of the Liabilities,
payable on demand and secured by the Collateral and shall, if not paid by the
Borrower when due or demanded, bear interest at the rate applicable to Floating
Rate Loans.
10.3 Expenditures by the Agent. In the event the Borrower shall fail
-------------------------
to pay taxes, insurance, assessments, costs or expenses which the Borrower is,
under any of the terms hereof or of any of the other Financing Agreements,
required to pay, or fails to keep the Collateral free from other security
interests, liens or encumbrances, except as permitted herein, the Agent may, in
its sole discretion, make expenditures for any or all of such purposes, and the
amount so expended, shall be part of the Liabilities, payable on demand and
secured by the Collateral and shall, if not paid by the Borrower when due or
demanded, bear interest at the rate applicable to Floating Rate Loans.
10.4 Custody and Preservation of Collateral. The Agent and the
--------------------------------------
Lenders shall be deemed to have exercised reasonable care in the custody and
preservation of any of the Collateral in its possession if it takes such action
for that purpose as the Borrower shall request in writing, but failure by the
Agent or any Lender to comply with any such request shall not of itself be
deemed a failure to exercise reasonable care, and no failure by the Agent or any
Lender to preserve or protect any right with respect to such Collateral against
prior parties, or to do any act with respect to the preservation of such
Collateral not so requested by the Borrower, shall of itself be deemed a failure
to exercise reasonable care in the custody or preservation of such Collateral.
10.5 Reliance by the Agent and the Lenders. The Borrower
-------------------------------------
acknowledges that the Agent and each Lender, in entering into this Agreement and
agreeing, in its discretion, to make Revolving Loans and otherwise extend credit
to the Borrower hereunder, has relied upon the accuracy of the covenants,
agreements, representations and warranties made herein by the Borrower and the
information delivered by the Borrower to the Agent or any Lender in connection
herewith (including without limitation the Financials).
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 38
10.6 Successors and Assigns. Whenever in this Agreement there is
----------------------
reference made to any of the parties hereto, such reference shall be deemed to
include, whenever applicable, a reference to the successors and assigns of the
Borrower and the successors and assigns of the Agent and each of the Lenders,
respectively. Notwithstanding anything herein to the contrary, the Borrower may
not transfer any of its rights or obligations under this Agreement without the
prior written consent of the Agent and all Lenders. No Lender may transfer any
of its rights or obligations under this Agreement except as provided in Section
-------
10.16.
-----
10.7 Applicable Law; Severability. THIS AGREEMENT AND ALL OTHER LOAN
----------------------------
DOCUMENTS (UNLESS ANY SUCH OTHER LOAN DOCUMENT SPECIFICALLY PROVIDES OTHERWISE)
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS, PROVIDED THAT TO THE EXTENT FEDERAL LAW WOULD ALLOW A HIGHER RATE OF
--------
INTEREST THAN WOULD BE ALLOWED BY THE LAWS OF THE STATE OF TEXAS, THEN WITH
RESPECT TO THE PROVISIONS OF ANY LAWS WHICH PURPORT TO LIMIT THE AMOUNT OF
INTEREST THAT MAY BE CONTRACTED FOR, CHARGED OR RECEIVED IN CONNECTION WITH ANY
OF THE SECURED OBLIGATIONS, SUCH FEDERAL LAW SHALL APPLY. Whenever possible,
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Agreement.
10.8 Submission to Jurisdiction; Waiver of Bond; Waive of Right to
-------------------------------------------------------------
Trial by Jury. THE BORROWER, THE AGENT AND EACH LENDER HEREBY CONSENT TO THE
-------------
JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED WITHIN DALLAS COUNTY,
TEXAS AND WAIVE ANY OBJECTION BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO
----- --- ----------
THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND THE BORROWER CONSENTS THAT
ALL SERVICE OF PROCESS UPON THE BORROWER MAY BE MADE BY REGISTERED MAIL OR
MESSENGER DIRECTED TO IT AT THE ADDRESS SET FORTH IN SECTION 10.13 AND THAT
-------------
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL
RECEIPT OR THREE (3) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO THE
BORROWER'S ADDRESS BY THE BORROWER'S AGENT AS SET FORTH BELOW. THE BORROWER
HEREBY APPOINTS CT CORPORATION, 000 X. XX. XXXX XXXXXX, XXXXXX, XXXXX 00000 AS
ITS AGENT FOR THE PURPOSE OF ACCEPTING THE SERVICE OF ANY PROCESS WITHIN THE
STATE OF TEXAS, WHICH APPOINTMENT MAY BE REVOKED ONLY WITH THE AGENT'S PRIOR
WRITTEN CONSENT. THE AGENT, EACH LENDER AND THE BORROWER WAIVE, TO THE EXTENT
PERMITTED BY LAW, TRIAL BY JURY, AND THE BORROWER WAIVES ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE
AGENT OR ANY LENDER. NOTHING CONTAINED IN THIS SECTION 10. 8 SHALL AFFECT THE
RIGHT OF THE AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING ANY
ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION.
10.9 Application of Payments. Notwithstanding any contrary provision
-----------------------
contained in this Agreement or in any of the other Financing Agreements, the
Borrower irrevocably waives the right to direct the application of any and all
payments at any time or times hereafter received by the Agent, for the account
of the Lenders, from the Borrower or with respect to any of the Collateral, and
the Borrower does hereby irrevocably agree that the Agent shall have the
continuing exclusive right to apply and reapply any and all payments received at
any time or times hereafter, whether with respect to the Collateral or
otherwise, against the Liabilities in such manner as the Agent may deem
advisable, notwithstanding any entry by the Agent or any Lender upon any of its
books and records.
10.10 Marshaling; Payments Set Aside. Neither the Agent nor any
-------------------------------
Lender shall be under any obligation to marshal any assets in favor of the
Borrower or any other party or against or in payment of any or all of the
Liabilities. To the extent that the Borrower makes a payment or payments to the
Agent, for the account of the Lenders, or the Agent enforces its security
interests or the Agent or any Lender exercises its rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 39
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
10.11 Section Titles. The section and subsection titles contained in
--------------
this Agreement shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties.
10.12 Continuing Effect. This Agreement, the Agent's security
-----------------
interests in the Collateral, and all of the other Financing Agreements shall
continue in full force and effect so long as any Liabilities shall be owed to
any Lender, and (even if there shall be no Liabilities outstanding) so long as
this Agreement has not been terminated as provided in Section 2.8.
-----------
10.13 Notices. Except as otherwise expressly provided herein, any
-------
notice required or desired to be served, given or delivered hereunder shall be
in writing, and shall be deemed to have been validly served, given or delivered
upon the earlier of (a) personal delivery to the address set forth below and (b)
in the case of mailed notice, three (3) days after deposit in the United States
mails, with proper postage for certified mail, return receipt requested,
prepaid, or in the case of notice by Federal Express or other reputable
overnight courier service, one (1) Business Day after delivery to such courier
service, addressed the party to be notified as follows:
(1) If to the Agent at:
Bank of America, National Association
000 X. XxXxxxx Xx., 00xx Xxxxx
Mail Code IL1-231-16-33
Xxxxxxx, XX 00000
Attention: Business Credit/URGENT
(2) If to any Lender, at the address set forth on the signature
pages hereto.
(3) If to the Borrower at:
American Builders & Contractors Supply Co., Inc.
Xxx XXX Xxxxxxx
Xxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxxx
with a copy to:
Xxx and Associates
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxx
or to such other address as each party designates to the other in the manner
herein prescribed; provided, that the foregoing methods of delivery are not
--------
exclusive and written notice in any other manner (including without limitation
via telecopy transmission) which is actually delivered shall also be deemed
valid and effective.
10.14 Equitable Relief. The Borrower recognizes that, in the event
----------------
the Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to the Agent and the Lenders; therefore, the Borrower agrees that the
Agent and the Lenders, if the Agent so requests, shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 40
10.15 Entire Agreement; Amendments. This Agreement, together with
----------------------------
the Financing Agreements executed in connection herewith, constitutes the entire
agreement among the parties with respect to the subject matter hereof, and
supersedes all prior written or oral understandings with respect thereto. No
amendment to this Agreement shall be effective unless it is in writing. The
written consent of the Agent and all Lenders shall be required for any agreement
which by its terms would agree to: (i) extend the Initial Term or postpone the
date on which any installment of principal or interest, or any payment of fees
provided by Section 2.6(b) or Section 2.6(c), is payable under this Agreement;
-------------- --------------
(ii) change any interest rate payable by Borrower under this Agreement, or the
amount of any payment of fees provided by Section 2.6(b), Section 2.6(c) or
-------------- --------------
Section 2.9; (iii) increase the Maximum Facility or any Lender's Pro Rata Share,
-----------
or the maximum aggregate undrawn face amount of Letters of Credit prescribed by
Section 2.2, or the maximum amount, or maximum number of occurrences, of
-----------
Overadvances which may be allowed under Section 11.9(b); (iv) increase the
---------------
maximum advance rate applicable to Eligible Accounts or Eligible Inventory in
respect of determination of the Loan Availability, (v) release from liability
any Person who is a guarantor of the Liabilities (other than in consideration
for full payment and performance of the obligations which are the object of any
such release), (vi) release any Collateral (provided however, that
----------------
notwithstanding the foregoing, the Agent may in its discretion and without the
consent of any Lender, agree to release or subordinate any security interest in
Equipment which was purchased by the Borrower using proceeds of capital
expenditures, as may be requested by the Borrower for the purpose of refinancing
the purchase price thereof; it being understood and agreed, in any event,
however, that the Agent shall have no obligation to agree to any such request by
the Borrower), or consent to allow the disposition (other than as expressly
allowed by the Financing Agreements) of any Collateral; (vii) release or
discharge Borrower from any obligation to make payments of principal or accrued
interest under the Financing Agreements (other than in consideration for full
payment and performance), (viii) change the definition of "Inventory Sublimit"
or "Requisite Lenders" or (ix) amend the provisions of this Section 10.15. The
-------------
written consent of Agent and Requisite Lenders shall be required as a condition
to the effectiveness of any amendment to this Agreement or waiver of any
provisions of this Agreement which would: (i) waive or modify any covenants
contained in Sections 7 or Section 8 of this Agreement or (ii) consent to allow
---------- ---------
any security interests, liens or encumbrances (in addition to those expressly
allowed by the Financing Agreements) on any Collateral (provided however, that
----------------
it is understood that consent by the Agent or any Lender may be conditioned upon
execution of a subordination and standstill agreement by the Borrower, the Agent
for the benefit of the Lenders and the proposed grantee of any such security
interest, lien or encumbrance, in form satisfactory to the Agent and any such
Lender; and provided further, that notwithstanding the foregoing, the Agent may
----------------
in its discretion and without the consent of any Lender, consent to allow
security interests, liens or encumbrances in Equipment which was purchased by
the Borrower using proceeds of capital expenditures, as may be requested by the
Borrower for the purpose of refinancing the purchase price thereof, it being
understood and agreed, in any event, however, that the Agent shall have no
obligation to agree to any such request by the Borrower) or (iii) agree to any
request for consent to any prepayment by the Borrower on the Senior Subordinated
Notes, or any redemption, repurchase or reacquisition thereof, or agree to any
request for consent to any amendment of the provisions of the Senior
Subordinated Notes or the Indenture which provide for subordination of the
Senior Subordinated Notes in favor of the Liabilities or subordination of any
guaranties thereof by any Subsidiary (including without limitation Article 10
----------
("Subordination") or Section 11.06 ("Subordination of Subsidiary Guaranties") of
-------------
such Indenture). Otherwise, except as provided or referenced above, the Agent
may amend, modify or waive any of the terms of the Financing Agreements, consent
to any action or failure to act by Borrower, or exercise or refrain from
exercising any powers or rights which it may have under the Financing Agreements
or as a matter of law, without the requirement of prior notice to or consent of
Lenders. Any consent requested by the Agent from any Lender, and any directive,
consent or refusal of consent given to the Agent by any Lender, shall be
communicated as provided in Section 10.13. In the event any consent requested by
-------------
the Agent is not either granted or refused within ten (10) Business Days after
it is requested by the Agent, the same shall be deemed to have been granted.
With respect to any amendment, extension or waiver which is to become effective
at any time when any Default or Event of Default is in existence, the Borrower
agrees that, if required by the Agent in consideration of and as a condition
precedent to the effectiveness thereof, the Borrower shall pay to the Agent, for
the account of the Lenders, in addition to fees, costs and expenses otherwise
provided by this Agreement, an administration fee in an amount determined by the
Agent and the Borrower by mutual agreement.
10.16 Participations/Assignments. No Lender shall have the right,
--------------------------
without the prior written consent of the Agent, to sell participations in, or
assignments of, all or any portion of its interest under any or all of the
Financing Agreements, provided that if no Default or Event of Default is in
--------
existence the identity of any Person purchasing any such participation or
assignment shall first be approved by Borrower as provided hereinbelow (it being
understood that no
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 41
such approval shall be required if any Default or Event of Default is in
existence); and provided further that, in any event, any Lender may assign (i)
--------------------
all or any portion of its interest under any or all of the Financing Agreements
to an affiliate of such Lender or (ii) all of its interest under all of the
Financing Agreements to any Person in connection with the sale of all or
substantially all of the loan portfolio of such Lender to such other Person, in
each case without the consent of the Agent or approval of the participant or
assignee by Borrower. The Agent's consent to an assignment by a Lender of all or
a portion of its interest under the Financing Agreements may be conditioned,
among other criteria, upon the execution and delivery of an assignment and
acceptance agreement in form and substance acceptable to the Agent, pursuant to
which the assignee of such assignment shall become a party to this Agreement as
a Lender and agree to be bound by all of the terms and provisions of the
Financing Agreements, and confirmation to the Agent's satisfaction, in form
required by the Agent, that such assignee is organized under the laws of the
United States or a state thereof or, alternatively, is exempt in a manner
prescribed by applicable law from withholding requirements relating to all
amounts payable to such assignee with respect to the Revolving Loans or
otherwise under the Financing Agreements. In connection with the foregoing and
with respect to any request of the Borrower for its approval of a participant or
assignee, the Lender proposing to enter into any participation or assignment
with respect to which such approval is required as provided above (or the Agent,
at the request of such Lender) shall notify Borrower of the identity of the
proposed participant or assignee, and Borrower shall have until the third
Business Day following receipt of such notice to notify such Lender (or the
Agent, as the case may be) that it does or does not approve such Person as a
participant or assignee. If no such written notification is received from the
Borrower by such Lender (or the Agent, as the case may be) within such time, the
Borrower shall be deemed to have irrevocably granted its approval to such
request. Borrower agrees that, in any event, any requested approval of a
participant or assignee shall not be unreasonably withheld.
10.17 Indemnity. Without limiting any other indemnity provisions
---------
contained in this Agreement or any of the other Financing Agreements, the
Borrower agrees to defend, protect, indemnify and hold harmless the Agent, each
Lender and each and all of their respective affiliates, officers, directors,
employees, attorneys and agents ("Indemnified Parties") from and against any and
-------------------
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including without limitation the fees and disbursements of counsel
for the Indemnified Parties in connection with any investigative, administrative
or judicial proceeding, whether or not the Indemnified Parties shall be
designated as a party thereto), which may be imposed on, incurred by, or
asserted against any Indemnified Party (whether direct, indirect or
consequential and whether based on any federal or state laws or other statutory
regulations, including without limitation Environmental Laws, securities and
commercial laws and regulations, under common law or at equitable cause, or on
contract or otherwise) in any manner relating to or arising out of this
Agreement or the other Financing Agreements, or any act, event or transaction
related or attendant thereto, the making and the management of the Revolving
Loans and the issuance of the Letters of Credit hereunder (including without
limitation any liability under Environmental laws or regulations) or the use or
intended use of the proceeds of the Revolving Loans and the Letters of Credit
hereunder; provided, that the Borrower shall not have any obligation to any
--------
Indemnified Party hereunder with respect to matters caused by or resulting from
the willful misconduct or gross negligence of such Indemnified Party or claims
by one Indemnified Party against another. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the Borrower
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all matters incurred by
the Indemnified Parties. Any liability, obligation, loss, damage, penalty, cost
or expense incurred by the Indemnified Parties shall be paid to the Indemnified
Parties on demand, together with interest thereon at the rate prescribed for the
Floating Rate Loans pursuant to Section 2.6 from the date incurred by the
-----------
Indemnified Parties until paid by the Borrower, and shall be added to the
Liabilities, and be secured by the Collateral. The provisions of and
undertakings and indemnifications set out in this Section 10.17 shall survive
-------------
the satisfaction and payment of the Liabilities and the termination of this
Agreement.
10.18 Representations and Warranties. Notwithstanding anything to
------------------------------
the contrary contained herein, (a) each representation or warranty contained in
this Agreement or any of the other Financing Agreements shall survive the
execution and delivery of this Agreement and the other Financing Agreements and
the making of the Revolving Loans and the issuance of the Letters of Credit and
(b) each representation and warranty contained in this Agreement and each other
Financing Agreement that is not made only as of a specific date or time, shall
be remade on the date of each Revolving Loan made or Letter of Credit issued
hereunder.
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 42
10.19 Standard of Materiality. As a general rule, the Agent and each
-----------------------
Lender hereby acknowledges that any single business location of the Borrower,
with the exception of its corporate headquarters in Beloit, Wisconsin, is not
material to the operations of the Borrower, such that the loss of assets at, or
the closure of, any single business location will not be deemed by the Agent or
any Lender to constitute a material adverse occurrence; provided, that the
--------
foregoing shall not be construed as an acknowledgment by the Agent or any Lender
that if a single business location of the Borrower generates liabilities that
are binding upon the Borrower, as a whole, such liability will not be deemed by
the Agent or any Lender to constitute a material adverse occurrence.
10.20 Ratable Sharing. Each Lender agrees that if it shall, through
---------------
the exercise of any right of counterclaim, set-off, banker's lien or otherwise,
receive payment of a proportion of the Liabilities which is greater than the
proportion received by any other Lender, that Lender receiving such
proportionately greater payment shall purchase participations (which it shall be
deemed to have done simultaneously upon the receipt of such payment) in the
claims of each of the other Lenders under this Agreement so that all such
recoveries with respect to the Liabilities shall be proportionate to their
respective Pro Rata Shares; provided, that if all or part of such
proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender, those purchases shall be rescinded and the purchase
prices paid for such participation shall be returned to that Lender to the
extent of such recovery, but without interest.
11. THE AGENT.
---------
11.1 Powers. Each Lender hereby irrevocably appoints and authorizes
--------------
Bank of America, National Association, successor by merger to NationsBank, N.A.,
to act as its Agent under this Agreement and the other Financing Agreements.
Each Lender hereby irrevocably appoints and authorizes American National Bank
and Trust Company of Chicago to act as Co-Agent under this Agreement and the
other Financing Agreements, provided, that unless and until otherwise agreed in
--------
writing by the Agent, the Co-Agent and the Lenders, the Co-Agent shall have no
obligations or duties in its capacity as Co-Agent. The Agent shall have and may
exercise such powers under this Agreement and the other Financing Agreements as
are specifically delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto. The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
applicable Financing Agreements and shall not by reason of this Agreement or any
of the other Financing Agreements have a fiduciary relationship with any Lender.
The designated titles of "Agent" and "Co-Agent" have been adopted solely for
convenience of identification, and it is expressly agreed that such terms shall
not imply, or be construed to create, any obligations or duties under principles
of agency or other applicable law.
11.2 Agent in its Capacity as a Lender. With respect to Revolving
---------------------------------
Loans made by it, the Agent shall have the same rights and powers under this
Agreement and the other Financing Agreements as any Lender and may exercise the
same as though it were not Agent, and the terms "Lender" or "Lenders" shall,
unless the context otherwise indicates, include the Agent in its capacity as a
Lender hereunder. The Agent, any Lender and their respective affiliates may
accept deposits from, lend money to, and generally engage in any kind of banking
or trust business with the Borrower, or Affiliates of the Borrower, as if it
were not Agent or as if it or they were not a Lender and without any duty to
account therefor to the other parties to this Agreement.
11.3 Independent Credit Analysis. Each Lender agrees that it has,
---------------------------
independently and without reliance upon the Agent, any other Lender, or the
directors, officers, agents, attorneys or employees of Agent or of any other
Lender, and instead in reliance upon information supplied to it by or on behalf
of the Borrower, and upon such other information as it has deemed appropriate,
made its own independent credit analysis and decision to enter into this
Agreement, and that it shall independently and without reliance upon the Agent,
any other Lender, or the directors, officers, agents, attorneys or employees of
the Agent or of any other Lender, continue to make its own independent credit
analysis and decisions. in acting or not acting under this Agreement and the
other Financing Agreements. The Agent shall not have any duty or responsibility
to provide any Lender with any credit or other information (other than notices
received by the Agent pursuant to Sections 7.9 and 7.13, and other than such
------------ ----
other reports and notices (including those referred to in Section 3.1), together
-----------
with supporting data, as any Lender may request from time to time, all of which
the Agent agrees to provide to each Lender on a prompt basis) concerning the
affairs, financial condition, litigation, liabilities, or business of the
Borrower which may at any time come into the possession of the Agent (or any of
its
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 43
Affiliates). In the event such information is furnished to any Lender by the
Agent, the Agent shall have no duty to confirm or verify its accuracy or
completeness and shall have no liability whatsoever with respect thereto.
11.4 General Immunity. Neither the Agent nor any of its directors,
----------------
officers, agents, attorneys or employees shall be liable to any Lender for any
action taken or omitted to be taken by it or them under this Agreement or any of
the other Financing Agreements or in connection therewith except for its or
their own willful misconduct or gross negligence. Without limitation on the
generality of the foregoing but subject to the last sentence of this Section
-------
11.4, the Agent: (a) shall not be responsible to Lenders for any recitals,
----
statements, warranties or representations under this Agreement or any of the
other Financing Agreements or any agreement or document relative thereto or for
the financial condition of the Borrower, (b) shall not be responsible for the
authenticity, accuracy, completeness, value, validity, effectiveness, due
execution, legality, genuineness, enforceability or sufficiency of this
Agreement or any of the other Financing Agreements or any other agreements or
any assignments, certificates, requests, financial statements, projections,
notices, schedules or opinions of counsel executed and delivered pursuant
thereto, (c) shall not be bound to ascertain or inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or any
of the other Financing Agreements on the part of the Borrower or of any of the
terms of any such agreement by any party thereto and shall have no duty to
inspect the property (including the books and records) of the Borrower, (d)
shall incur no liability under or in respect of this Agreement or any of the
other Financing Agreements or any other document or collateral by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telegram, cable or telex) believed by the Agent to be genuine and signed or sent
by the proper party, and (e) may consult with legal counsel (including counsel
for the Borrower), independent public accountants and other experts selected by
the Agent and shall not be liable for any action taken or omitted to be taken in
good faith in accordance with the advice of such counsel, accountants or
experts. The Agent agrees to use the same degree of care, with respect to the
performance of its duties hereunder, as it uses with respect to credit
facilities in which it alone is interested.
11.5 Right to Indemnity. Agent shall be fully justified in failing
------------------
or refusing to take any action under this Agreement and each of the other
Financing Agreements or in relation thereto unless it shall first be indemnified
(upon requesting such indemnification) to its satisfaction by Lenders against
any and all liability and expense which it may incur by reason of taking or
continuing to take any such action. Lenders further agree to indemnify the Agent
ratably in accordance with their Pro Rata Shares for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of this Agreement or any of the other Financing Agreements or the
transactions contemplated thereby, or the enforcement of any of the terms
thereof or of any other documents, provided no such liability, obligation, loss,
--------
damage, penalty, action, judgment, suit, cost, expense or disbursement results
from Agent's gross negligence or willful misconduct. Each Lender agrees to
reimburse Agent in the amount of its Pro Rata Share of any out-of-pocket
expenses which the Agent is entitled to receive, but has not received,
reimbursement pursuant to this Agreement or any of the other Financing
Agreements.
11.6 Action by Agent.
---------------
(1) Actual Knowledge. The Agent may assume that no Event of Default
----------------
or Default has occurred and is continuing, unless Agent has actual knowledge of
the Event of Default or Default, has received notice from the Borrower or any of
their independent certified public accountants stating the nature of the Event
of Default or Default, or has received notice from a Lender stating the nature
of the Event of Default or Default and that Lender considers the Event of
Default or Default to have occurred and to be continuing.
(2) Agent's Obligations. The Agent has only those obligations under
-------------------
this Agreement and the other Financing Agreements that are expressly set forth
therein as obligations. No duty to act, or refrain from acting, and no other
obligation whatsoever, shall be implied on the basis of or imputed in respect of
any right, power or authority granted to the Agent or shall become effective in
the event of any temporary or partial exercise of such rights, power or
authority.
(3) Discretion to Act. Except for any obligation expressly set forth
-----------------
in this Agreement or any of the other Financing Agreements the Agent may, but
shall not be required to, exercise its discretion to act or not act, except
that, subject to the Agent's right to indemnity if requested by the Agent
pursuant to Section 11.5, the Agent
------------
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 44
shall be required to act or not act upon the
instructions of all of the Lenders and those instructions shall be binding upon
Agent, provided that Agent shall not be required to act or not act if to do so
--------
would expose Agent to liability, would be inconsistent with the Agent's practice
in similar situations when acting solely for its own account, or would be
contrary to this Agreement, any of the other Financing Agreements or to
applicable law.
11.7 Proportionate Interest of Lenders under the Financing
-----------------------------------------------------
Agreements. In the event any remedy may be exercised with respect to the
----------
Financing Agreements or the Collateral, the Agent shall pursue remedies
designated by all of the Lenders subject to the proviso set forth in subsection
----------
11.6(c). Each Lender agrees that no Lender shall have any right individually to
-------
realize upon the security created by the Financing Agreements or otherwise
enforce any provision thereof, or make demand thereunder, it being understood
and agreed that such rights and remedies may be exercised by the Agent for the
ratable benefit of Lenders upon the terms of this Agreement and the other
Financing Agreements. All actions taken by the Agent under this Agreement or any
other Financing Agreement will be deemed taken by the Agent for the ratable
benefit of the Lenders. Nothing set forth in the previous sentence shall confer
any rights or benefit on Borrower or on any other Person except the Lenders.
11.8 Agent's Resignation. The Agent may resign at any time by giving
-------------------
at least thirty (30) days' prior written notice of its intention to do so to
each Lender and to Borrower, and upon any such notice, the Requisite Lenders
shall have the right to appoint a successor Agent; provided that if such
--------
successor shall not be a signatory to this Agreement, such appointment shall be
subject to the consent of Borrower, which consent shall not be unreasonably
withheld. If no successor Agent shall have been so appointed and shall have
accepted such appointment within twenty (20) days after the Agent's giving of
such notice of resignation, then the resigning Agent may, with the consent of
Borrower, which consent shall not be unreasonably withheld, appoint a successor
Agent. After any resigning Agent's resignation hereunder as Agent, it shall be
discharged from its duties and obligations under this Agreement and the other
Financing Agreements but the provisions of this Section 11 shall continue to
----------
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent hereunder and thereunder. Upon appointment of a successor Agent,
the term "Agent" shall for all purposes of this Agreement thereafter mean such
successor. 1.1
11.9 Disbursement of Proceeds of Loans and Other Advances.
----------------------------------------------------
(1) Each Lender severally agrees that it shall, not later than 2:00
p.m. (Chicago, Illinois time) on the date of each Revolving Loan, make available
to the Agent, in lawful money of the United States of America and in same day
funds, an amount equal to such Lender's Pro Rata Share of the Revolving Loan to
be made to the Borrower; provided that such Lender shall have received notice of
--------
such Revolving Loan before 1:00 p.m. (Chicago, Illinois time). The Agent shall
make such funds available to the Borrower, in same day funds in accordance with
the provisions of this Agreement. The proceeds of Revolving Loans requested by
the Borrower pursuant to subsection 2.1(a) of this Agreement, or otherwise
-----------------
disbursed pursuant to the terms of this Agreement, shall be disbursed by the
Agent on behalf of each Lender. Each Lender's obligations under this Agreement
are several, and no Lender shall have any obligation, responsibility or
liability for any breach or default of any such obligations by any other Lender.
(2) The Agent may (and is hereby irrevocably authorized by the
Lenders) at any time (whether or not any Event of Default or Default exists), to
make Revolving Loans which result in an Overadvance, as the Agent may agree with
Borrower to allow in its sole discretion, provided that (i) the aggregate amount
--------
of Overadvance existing upon funding any such Revolving Loan shall not in any
event exceed Five Million Dollars ($5,000,000.00), (ii) the Borrower shall agree
that any such Overadvance shall be eliminated within ten (10) Business Days
after the date of the occurrence thereof and (iii) the Agent and the Borrower
shall not agree to more than three (3) separate occurrences of any such
Overadvance during any period of one (1) year; and provided further, that it is
----------------
agreed that the Agent shall not in any event be obligated to allow any such
Overadvance.
(3) The Agent's use of its own checks upon its funds or the Agent's
transfer of its own funds, by wire or otherwise, to an account of the Borrower
shall be deemed to be disbursements made by each Lender under this Agreement and
pursuant to the other Financing Agreements.
11.10 Participation in Letters of Credit. Immediately upon the
----------------------------------
issuance by Agent of any Letter of Credit, each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from the Agent,
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 45
without recourse or warranty, an undivided interest and participation, to the
extent of such Lender's Pro Rata Share, in such Letter of Credit and any
security therefore and any guaranty pertaining thereto. Notwithstanding the
foregoing, by its purchase of such participation, no Lender shall be deemed to
have assumed any liability to the beneficiary of any Letter of Credit. The Agent
shall promptly upon receipt thereof, remit to the Lenders, in accordance with
their respective Pro Rata Shares, all Letter of Credit fees received by the
Agent under subsection 2.6(c). In the event Agent makes any payment to any
-----------------
Person with respect to any Letter of Credit, Agent shall promptly notify the
other Lenders with a participating interest in such Letter of Credit specifying
the amount reimbursable by the Borrower thereunder. If such reimbursement is not
made by the Borrower on the day when due the amount of such reimbursement
obligation shall be deemed to be a Revolving Loan made pursuant to Section 2.1.
11.11 Apportionment of Payments. Aggregate principal and interest
-------------------------
payments shall be apportioned among all outstanding Loans to which such payments
relate and payments of aggregate fees to Lenders (other than the Agent's fee
described in subsection 2.6(d)), shall be apportioned ratably among Lenders in
-----------------
each case according to the payments remitted to the Agent and all their Pro Rata
Shares. All amounts received by the Agent shall be applied first to pay any
fees, expenses or indemnities then due the Agent, second to pay any fees then
due the Lenders, third to pay interest due on Revolving Loans, fourth to pay or
prepay principal of the Revolving Loans, and fifth to pay any other obligations
to any and all of the Lenders allocated, if sufficient funds are not available
to pay all such Liabilities, to the Lenders in proportion to their Pro Rata
Shares.
11.12 Agent Reports. The Agent shall, once every seven (7) days, or
-------------
sooner, at the option of the Agent, distribute to each Lender, at its primary
address set forth on the signature page hereof, such funds as it is entitled to
receive together with a statement ("Agent's Report") disclosing as of the
--------------
preceding Business Day, the aggregate principal balance of the Revolving Loans
outstanding as of such date, repayments and prepayments of principal received
from the Borrower with respect to the Revolving Loans since the immediately
preceding Agent's Report, additional Revolving Loans made to the Borrower since
date of the immediately preceding Agent's Report, interest and fees received
from the Borrower since the date of immediately preceding Agent's Report, the
aggregate amount of Eligible Accounts and Eligible Inventory and the Loan
Availability as of the Agent's most recent determination, the undrawn face
amount of all Letters of Credit issued by Agent for the account of Borrower, the
amount of any expenses of Agent paid by Agent since the immediately preceding
Agent's Report for which Agent has not been reimbursed by the Borrower and the
amount received by the Agent from the Borrower since the immediately preceding
Agent's Report in payment of outstanding expenses of Agent. Such Agent's Reports
shall also disclose the net amount due to or due from the Lenders. If the
Agent's Report discloses a net amount due from the Agent to the Lenders, the
Agent shall, concurrently with the delivery of the Agent's Report to the Lenders
transfer, by wire or otherwise, such amount to the Lenders in funds immediately
available to the Lenders in accordance with each Lender's instructions. If such
report discloses a net amount due to Agent from the Lenders, then the Lenders
shall transfer by wire or otherwise, such amount, in funds immediately available
to the Agent as instructed by the Agent. Such net amount due from a Lender to
the Agent shall be due on the same day such Lender receives such Agent's Report,
if such Agent's Report is received before 1:00 p.m. (Chicago, Illinois time) and
such net amount shall be due on the Business Day following receipt of such
Agent's Report, if such Agent's Report is received after 1:00 p.m. (Chicago,
Illinois time). Any amounts due hereunder to the Agent from the Lenders or vice
versa which are not paid when due shall bear interest from the date due until
ten (10) days thereafter at the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System only,
arranged by federal funds brokers as published as of such day by the Federal
Reserve Bank of New York and thereafter, until paid in full, at the rate
applicable to the Floating Rate Loans.
11.13 Designated Senior Debt. The Borrower hereby agrees that all
----------------------
Liabilities now or hereafter existing, from time to time, are expressly deemed
and designated as being "Designated Senior Debt" within the meaning of the
Indenture, and is entitled to the benefits of subordination in favor of such
Designated Senior Debt as provided therein.
11.14 Amendment and Restatement. This Agreement is in amendment and
-------------------------
restatement of the Existing Loan Agreement (defined in the recital of this
Agreement). All "Liabilities" under the Existing Loan Agreement, and all
security interests, liens and collateral assignments granted to the Agent under
the Existing Loan Agreement or any of the other Financing Agreements defined
therein, hereby are renewed and continued in full force and effect, and
hereafter shall be governed, by this Agreement. All existing "Financing
Agreements" previously executed
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 46
in connection with the Existing Loan Agreement shall continue in full force and
effect and any and all references therein to the Existing Loan Agreement
(regardless of terminology) shall be deemed to refer to and mean this Agreement.
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 47
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first written above.
AMERICAN BUILDERS &
ATTEST: CONTRACTORS SUPPLY CO., INC.
By: By:
-------------------------- --------------------------------------
Name: Xxxxxx X. Story, Chief Financial Officer
------------------------
Title:
-----------------------
BANK OF AMERICA, NATIONAL
ASSOCIATION, in its capacity as the Agent
By:
--------------------------------------
Address for Notice:
000 X. XxXxxxx Xx., 00xx Xxxxx
Mail Code IL1-231-16-33
Xxxxxxx, XX 00000
Attention: Business Credit/Regional Manager
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO,
in its capacity as Co-Agent
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address for Notices:
Attention:
-------------------------------
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 48
BANK OF AMERICA, NATIONAL ASSOCIATION,
in its capacity as a Lender
Pro Rata Share: By:
34.00% --------------------------------------
$85,000,000 Xxxxx Xxxxxx, Vice President
Address for Notice:
000 X. XxXxxxx Xx., 00xx Xxxxx
Mail Code IL1-231-16-33
Xxxxxxx, XX 00000
Attention: Business Credit/Regional Manager
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO,
in its capacity as a Lender
Pro Rata Share: By:
12.80% --------------------------------------
$32,000,000 Name:
------------------------------------
Title:
-----------------------------------
Address for Notice:
Attention:
-------------------
LASALLE BUSINESS CREDIT, INC.
Pro Rata Share: By:
12.60% --------------------------------------
$31,500,000 Name:
------------------------------------
Title:
-----------------------------------
Address for notice:
Attention:
-------------------------------
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 49
XXXXXX TRUST AND SAVINGS BANK
Pro Rata Share: By:
12.60% --------------------------------------
$31,500,000 Name:
------------------------------------
Title:
-----------------------------------
Address for notice:
Attention:
-------------------------------
FLEET CAPITAL CORPORATION
Pro Rata Share: By:
20.00% --------------------------------------
$50,000,000 Name:
------------------------------------
Title:
-----------------------------------
Address for notice:
Attention:
-------------------------------
WASHINGTON MUTUAL BANK
Pro Rata Share: By:
8.00% --------------------------------------
$20,000,000 Name:
------------------------------------
Title:
-----------------------------------
Address for notice:
Attention:
-------------------------------
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 50
CONSENT AND AGREEMENT BY VALIDITY GUARANTORS
Each of the undersigned hereby consents to the foregoing Third
Amended and Restated Loan and Security Agreement ("Loan Agreement") and each of
--------------
the undersigned agrees to the continued effectiveness of the Validity
Certification, respectively, previously executed and delivered by the
undersigned to the Agent. All references in the Validity Certification to the
Existing Loan Agreement, as to any time on or after the effective date of the
Loan Agreement, shall be deemed to be references to the Loan Agreement, as
amended by any and all subsequent amendments thereto. This agreement has been
executed as of the effective date specified in the Loan Agreement
------------------------------------------
Xxxxxxx X. Xxxxxxxxx
------------------------------------------
Xxxxxx X. Story
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT - Page 51
